Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

PRIVATE BILL PETITIONS [Lords] (Standing Orders not complied with).

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petitions for the following Bills, originating in the Lords, the Standing Orders have not been complied with, namely:

West Hartlepool Corporation Bill [Lords].

Bombay, Baroda, and Central India Railway Bill [Lords].

Report referred to the Select Committee on Standing Orders.

Provisional Order Bills (Standing Orders applicable thereto complied with).

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:

Ministry of Health Provisional Orders (No. 3) Bill.

Bill to he read a Second time to-morrow.

Provisional Order Bills [Lords] (No Standing Orders applicable).

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, brought from the Lords, and referred on the First Reading thereof, no Standing Orders are applicable, namely:

Ministry of Health Provisional Orders (Sheffield Water Charges) Confirmation Bill [Lords].

Bill to be read a Second time To-morrow.

Provisional Order Bills [Lords] (Standing Orders applicable thereto complied with).

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, brought from the Lords, and referred on the First Reading thereof,. the Standing Orders which are applicable thereto have been complied with, namely:

Ministry of Health Provisional Orders Confirmation (No. 1) Bill [Lords].

Bill to be read a Second time To-morrow.

Essex County Council (Barking Bridge) Bill,

Hoylake and West, Kirby Gas and Water Bill,

As amended, considered to be read the Third time.

MINISTRY OF HEALTH PROVISIONAL ORDER (FRIMLEY AND FARNBOROUGH DISTRICT WATER) BILL,

"to confirm a Provisional Order of the Minister of Health relating to the Frimley and Farnborough District Water Company," presented by Mr. NEVILLE CHAAIBERLAIN; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 87.]

Wimbledon and Sutton Railway Bill,

Petition for additional Provision; referred to the Examiners of Petitions for Private Bills.

RAL ANSWERS TO QUESTIONS.

BRITISH ARMY.

ARGENTINE FROZEN MEAT.

Dr. CHAPPLE: 1.
asked the President of the Board of Trade whether a contract for the supply of meat to the Army has been given to an Argentine meat trust: and whether he can state its terms?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Gwynne): I have been asked to reply. No contract has been placed with an Argentine meat trust,
but a special purchase of Argentine frozen meat to the value of about £30,000 has recently been made from a British firm. The purchase was urgently necessary in order to replace meat unexpectedly drawn by the Navy from Army stores in the Mediterranean. I am satisfied that no other firm could have supplied to time. The case was quite exceptional, and the circumstances are unlikely to recur. With regard to the last part of the question, the conditions of contract were normal and the prices fair and reasonable, but it is the invariable practice to treat contract prices as strictly confidential.

RECRUIT INSPECTION (W. MILNE).

Sir ROBERT HAMILTON: 28.
asked the Under-Secretary of State for War whether his attention has been called to the case of William Milne, of Kirkwall, who when called up for medical examination at Inverness in July, 1916, fell in a fit and cut his head and remained in camp without medical attention until the next day, when he was removed to hospital, where he died; whether he is aware that the sum of £4 18s. allowed to the father towards the expenses of the removal of the body and interment in Orkney amounted to less than a quarter of the cost; and whether, in view of the above circumstances and the poverty of the father, who is in receipt of an old age pension, he is prepared to pay the whole cost of the removal and interment of the body?

Mr. GYWNNE: The hon. Member will realise that after a. lapse of seven years it is very difficult to reopen a case of this kind, but I am inquiring into it, and will communicate with him in due course.

PARK HALL CAMP, OSWESTRY.

Lieut.-Commander KENWORTHY: 29.
asked the Under-Secretary of State for War if Park Hall camp, Oswestry, has been disposed of privately by the War Office; if he is aware that this property consists of nearly 400 acres of land, with several good houses on it, close to the town, and was equipped with railways, roads, sewers, Liverpool water, electric light, and sewage disposal works, at a cost of many thousands of pounds to the taxpayers; and if he, will state why the property was not offered for sale publicly by auction or public tender?

The FINANCIAL SECRETARY to the TREASURY (Major Boyd-Carpenter): The answer to the first two parts of the question is in the affirmative, with the qualifications that the sale was effected by the Disposal and Liquidation Commission and that. part of the property is still occupied by the War Department as an ordnance depot—the continuance of that occupation, at a rental of £178 per annum for 89 acres so long as required, being one of the conditions of sale. This rental is decidedly favourable to the Commission, taking into account the buildings situated on the land. In the case of sales of landed property, it is impracticable to adopt a general rule of sale by public tender, sales by private treaty having in many instances resulted in better prices being obtained. In this particular case it was presumably common knowledge that the property was for disposal; and, after examination by experts, the sale was considered an advantageous one from the point of view both of conditions and of price.

Lieut.-Commander KENWORTHY: Is the hon. and gallant Gentleman aware that a great many reputable bodies bid for this valuable property, and the whole thing was disposed of out of hand to people who were of no substance, and no one knows where they got the money?

Major BOYD-CARPENTER: I can only say that enquiries were made, and that a highly gratifying price was received.

Lieut.-Commander KENWORTHY: Is it not a fact that this sale is not finally closed, and will the hon. and gallant Gentleman look into the matter to see whether a better price is not obtainable locally?

Major BOYD-CARPENTER: With the qualification I have given.

OCCUPYING TROOPS (GERMANY ANT) CONSTANTINOPLE).

Mr. D. G. SOMERVILLE: 33.
asked the Under-Secretary of State for War the cost, during each of the last six weeks, of the British Army in Germany and Constantinople and how this charge will be provided for in the Estimates in each case, seeing that no money is forthcoming either from Germany or Turkey to pay for it?

The UNDER-SECRETARY of STATE for WAR (Lieut.-Colonel Guinness): The current weekly costs are: Troops in Germany, £34,000, exclusive of accommodation and other services provided free by the Germans. Troops in Turkey, £82,000. These figures show the total cost. I regret I have been unable to ascertain the extra cost due to troops being stationed in Germany or Turkey instead of elsewhere. As regards the last part of the question, I would refer the hon. Member to pages 31, 202 and 203 of the Army Estimates. The estimated receipts from Germany are shown on the latter pages.

DUNBAR BARRACKS.

Major WARING: 34.
asked the Under-Secretary of State for War whether, seeing that the barracks at Dunbar are now empty and in charge of a caretaker, he has decided what use is to be made of the premises?

Lieut.-Colonel GUINNESS: It is not yet clear whether these barracks will or will not be required in future, and in the meantime it would be imprudent to dispose of them.

WAR GRAVES (PROYART CEMETERY).

Mr. MACPHERSON: 35.
asked the Under-Secretary of State for War whether the British and French authorities are proposing to exhume the bodies of soldiers buried in the Proyart communal extension cemetery; whether he is aware that parents who have visited this public cemetery, and have made local arrangements to have the resting-place of their sons cared for, are anxious that their resting-place should not now be disturbed; and will he have their wishes respected?

Lieut.-Colonel GUINNESS: The French are converting this mixed cemetery into a purely German one of 21,000 graves, and it is therefore necessary to re-inter the British dead at Harbonnières. The reburial will be carried out with due reverence, and I can assure my right hon. Friend that the Imperial War Graves Commission are fully alive to the considerations to which he refers.

Mr. MACPHERSON: Will the hon. and gallant Gentleman see to it that parents whose sons are buried there are duly notified of the removal of the bodies?

Lieut.-Colonel GUINNESS: I am sure that will be done. I will draw the attention of the War Graves Commission to the matter.

Sir B. FALLE: Will this be done at our expense, or at the expense of the French or Germans?

WELSH GUARDS (LANCE-SERGEANT E. FORD).

Mr. PALING: 38.
asked the Under-Secretary of State for War if his attention has been called to the case of Lance-Sergeant E. Ford, late of the Welsh Guards, who served throughout the late War, was transferred to the Reserve with a good character after 18 years and 300 days' service, was an instructor in drilling, bombing, and gas, and qualified for first-class proficiency pay, which he has not yet received; if he is aware that his proficiency pay has been withheld because he gave evidence at a court-martial in 1916; and will be institute inquiries into this case?

Lieut.-Colonel GUINNESS: I have already inquired into this case at the hon. Member's instance, and I should be glad if he would furnish me with any evidence in support of the suggestion that first-class proficiency pay was improperly withheld. My information is that Lance-Sergeant Ford never qualified for such pay.

Mr. PALING: I will endeavour to do so.

DISABILITY CLAIM (JAMES KEEFE).

Mr. PALING: 39.
asked the Under-Secretary of State for War if he is aware that James Keefe, of 43, Fisher Street, Bentley, Doncaster, who joined His Majesty's Forces in 1920, after having spent seven months in Ireland and eight months in Germany, was sent back to England and discharged on 24th November, 1922, as suffering from pulmonary tuberculosis; that the medical boards have decided that Keefe's disability is in no way connected with his military service, hut that previous to entering the Army his health record was excellent; that his own doctor who has known him for years declares that Keefe must have contracted his disease during his two years' service and that Keefe has since his discharge only received a gratuity of £12, and being totally unable to work is entirely
dependent upon his relations for his maintenance; and will he have further inquiries made into this case?

Mr. GWYNNE: I am having further inquiries made into this case, and will communicate with the hon. Member.

PACIFIC CABLE.

Commander BELLAIRS: 2.
asked the President of the Board of Trade whether he can make a statement as to the route of the new Pacific cable; in what way will it be linked with the American cable to Honolulu; and when it is to be put in hand?

The POSTMASTER-GENERAL (Sir William Joynson-Hicks): I have been asked to reply. The Pacific Cable Board are now laying new cables between Suva (Fiji) and Auckland, and between Sydney and Southport (Queensland). No decision has yet been taken regarding the duplication of the cable north of Fiji.

IMPORTED INTO THE BAHAMAS.


—
1913.
1920.
1921.
1922.†


Whiskey
…
…
…
Doz. Quarts
2,215
11,369
126,775
247,043


Proof Gallons
515*
95,499
103,115
455,457


Rum
…
…
…
Proof Gallons
26,052
38,483
37,465
60,479


Gin
…
…
…
Proof Gallons
19,210*
43,118
36,964
62,425


Brandy
…
…
…
Proof Gallons
252*
986
872
847


Alcohol
…
…
…
Proof Gallons
228*
1,914
6,212
36,926


Unenumerated Spirits
…
Proof Gallons
—
11
54
44


Cordials and Liqueds
…
…
£
—
1,583
3,368
5,903


*Described as "Gallons" in 1913. †The figures for 1922 are provisional.

Mr. J. H. SIMPON: 4.
asked the president of the Board of Trade the amount of spirits cleared from Nassau, Bahamas, to St. John, New Brunswick, to St. Pierre Miquelon, and to Tampico, Mexico, in the years 1913 and 1922, respectively?

Commander BELLAIRS: Will the hon. Gentleman make representations as to the desirability of linking the route with Honolulu?

Sir W. JOYNSON-HICKS: I will certainly see that the representations are conveyed.

WEST INDIES (SPIRIT TRADE).

Mr. J. HOPE SIMPSON: 3.
asked the President of the Board of Trade the amount of spirits imported into the Bahamas and Barbados in the years 1913, 1920, 1921, and 1922, respectively?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Viscount Wolmer): The answer contains statistical tables, and perhaps the hon. Member will allow me to circulate it in the OFFICIAL REPORT.

Following is the answer:

The following statement shows the quantities of spirits imported into the Bahamas and Barbados, respectively, during each of the years specified:

Viscount WOLMER: I regret that I am unable to furnish these particulars.

Mr. SIMPSON: Is it a fact that no liquor was exported to these ports before 1922?

Viscount WOLMER: I do not think that that is accurate.

FRANCE AND RUHR DISTRICT.

BRITISH TRADE.

Mr. NICHOL: 5.
asked the President of the Board of Trade if he is aware that orders for 1,820 tons of ship plates were placed by Messrs. P. M'Callum and Sons, Limited, of Greenock, with firms in the Ruhr district of Germany, and that, owing to the French authorities' action, this material, much of which is rolled and has been ready for shipment since February, cannot be transported to this country, with the result that the Blythswood Shipbuilding Company, Limited, of Scotstown, owing to the non-delivery of the plates, have been forced to suspend the building of several vessels and wholly close down their yards, which otherwise would have been employing 1,200 workmen; and what steps he is prepared to take to remedy this situation?

Viscount WOLMER: I have been fully informed of the position by the two firms mentioned by the hon. Member. I would refer the hon. Member to the statements which the President of the Board of Trade made on the 28th of March and the 12th April, showing the steps which His Majesty's Government have taken, and are taking, to secure the delivery of these and similar goods.

Mr. NICHOL: Is the hon. Gentleman prepared to take such steps as will enable those plates which are ready for shipment to be shipped at once?

Viscount WOLMER: If the hon. Member will look at the OFFICIAL REPORT to which I have referred, he will see that my right hon. Friend is taking the most active steps open to him. The difficulty at the moment rests not with the French Government, but with the German Government.

Mr. W. THORNE: Is there any reason why these plates should be made abroad, when men are out of employment at home?

Mr. SHINWELL: Is it not possible for the President of the Board of Trade to take immediate steps to deal with this difficulty, having regard to its effect on employment in the Clyde district?

Mr. HANNON: Will the Labour party in this country advocate adequate protection for British industries?

Viscount WOLMER: My right hon. Friend is making the most energetic representations he can, but it does not lie in our power at present to press the German Government.

Captain WEDGWOOD BENN: Do not the German Government offer to allow these goods to come if the French will waive their rights?

Lieut.-Commander KENWORTHY: 53.
asked the Chancellor of the Exchequer whether the question of the disposal of the money collected by the French Customs posts in the Ruhr district on British goods entering the occupied territory has yet been settled; if so, in what way; and, if not, what steps are being taken by His Majesty's Government to pursue the question?

Major BOYD-CARPENTER: No settlement of the question has yet been arrived at. It is understood that the French and Belgian Governments intend very shortly to make certain suggestions in regard to the matter, which can, however, be finally regulated only as part of a general resettlement of the reparation accounts.

Lieut. - Commander KENWORTHY: Does the Government realise that in the meantime British merchants are being deprived of their money, and cannot we do something to hasten this part of the question being decided?

Major BOYD-CARPENTER: I think the Government realise all these matters to which the hon. and gallant Member refers.

Captain BENN: Does not the Government think we have some claim on these duties which are exacted from British merchants?

Major BOYD-CARPENTER: The Gov ernment recognise all these matters.

EXPORTS TO GREAT BRITAIN.

Mr. FRANK GRAY: 12.
asked the President of the Board of Trade whether he can state the value of goods imported into the country from the occupied area of Germany since the 5th January last; whether he is aware that it is part of the policy of the French authorities to prevent exports from this area; and whether he has received representations
from the British representatives in the occupied area as to the injury resulting to British trading from this policy?

Viscount WOLMER: No statistics are available with regard to the imports into this country from the occupied area, but I have reason to believe they are very small. It is no part of the policy of the occupying authorities to prevent exports from the area to this country. Indeed, they have taken steps to facilitate them, but exportation is rendered practically impossible by the attitude of the German Government in refusing to allow firms to deliver goods under licences issued by the constituted licensing authorities. I have had representations from British exporters in the area as well as from firms in this country as to the injury to British firms resulting from the present situation.

Mr. GRAY: Has the Noble Lord seen the statement in the Press to-day that British traders in Cologne take an entirely different view?

Mr. T. WILLIAMS: Does the Noble Lord consult the British officials in Cologne before answering questions in this House?

Viscount WOLMER: Yee. We are in the closest touch with our officials.

Mr. WILLIAMS: Is the Noble Lord not aware that British officials in Cologne make statements very different from that of the Noble Lord?

Viscount WOLMER: No, Sir.

TRADE CONTROL.

Captain BENN: 16.
asked the President of the Board of Trade whether any proposal has been made by the German Government offering to relinquish control of trade in the occupied area, provided that the armies of occupation would follow the same course; whether such a proposal has been considered; and. if so, with what result?

Viscount WOLMER: The proposal of the German Government that they would in certain cases relinquish the export duties which they were not in a position to collect, if the French and Belgian
Governments would also relinquish all claim to such duties in the areas of which they were in occupation, was rejected by His Majesty's Government for the reasons which the President of the Board of Trade gave in the Debate on the 12th April.

Captain BENN: If the proposals had been accepted, would it not have been of great advantage to British trade?

Viscount WOLMER: No. I think that the result of our acceptance of those proposals would have been for us to side definitely with Germany in this matter.

Captain BENN: I am not asking the Noble Lord about Germany, but whether the acceptance of these proposals would not have done something to assist these traders?

GERMAN REPARATION DUTY.

Captain BENN: 17.
asked the President of the Board of Trade if he will now state whether the German Government has refused to refund the 26 per cent. reparation duty on goods bearing Bad Ems permits; and whether German goods shipped to this country pay 36 per cent. duty as against 10 per cent. payable on such goods shipped to other European countries?

Viscount WOLMER: I have seen allegations that the German Government refuse to refund the 26 per cent. reparation duty on goods exported from the occupied territory to the United Kingdom under Inter-allied licences, but no specific case of such refusal has been brought to my notice. I am, however, having some further enquiries made on the subject.

Captain BENN: Since the Noble Lord is in closest touch with Cologne, has he seen the sworn certificate of the Chamber of Commerce there that this reparation is denied?

Viscount WOLMER: I have seen the statement of the Chamber of Commerce, but no specific case has yet been brought forward.

Captain BENN: Is the Noble Lord aware that the German Government have definitely and officially announced that they will not make this reimbursement? Is not that sufficient for the Board of Trade?

Viscount WOLMER: We have not been officially informed by the German Government and specific cases have not been brought to our attention.

GERMAN WORKMEN (EVICTION AND IMPRISONMENT).

Lord H. CAVENDISH-BENTINCK: 48.
asked the Prime Minister whether, in view of the damage inflicted on British interests by the French occupation of the Ruhr, the Government will protest against such actions of the French authorities as the eviction of large numbers of German workmen and their families from their dwellings and the wholesale imprisonment of German subjects, as calculated to prolong the dispute and hinder British cooperation in the settlement of the reparations question?

The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Ronald McNeill): I cannot give any such undertaking, as I do not think that the action proposed by the Noble Lord would serve the purpose he has in view.

Lord H. CAVENDISH-BENTINCK: Can the hon. Gentleman say when the British Government will feel itself at liberty to assert British ideals and uphold and defend British interests?

Captain Viscount CURZON: Will the hon. Gentleman assure us that the British Government will not take any action which might be construed as hostile action towards France?

Sir W. DAVISON: is not the real reason that the Germans have failed to perform their duty under the Treaty of Versailles?

Mr. McNEILL: His Majesty's Government will, on every possible occasion, uphold British interests, but they have no intention whatever of pursuing a pinprick policy towards France.

Lord H. CAVENDISH- BENTINCK: Who is responsible for giving M. Loucheur the impression that this country is favourable to the Ruhr policy of France?

HON. MEMBERS: Answer, answer'

Mr. McNEILL: On a point of Order. Hon. Members are asking me to answer. I should be glad to do so, but, unfortu
nately, I could not hear a word that my Noble Friend said.

Mr. SPEAKER: The question was not one that could be answered at Question Time.

TRADE AND COMMERCE.

COTTON YARNS (IMPORTS FROM BELGIUM).

Mr. SIMPSON - HINCHCLIFFE: 7.
asked the President of the Board of Trade the weight of cotton yarns imported into this country from Belgium for 1922, and the latest. available figures for 1923.

Viscount WOLMER: The aggregate weight of cotton yarns imported into the United Kingdom and registered as consigned from Belgium, amounted to 2,836,593 lbs. during the year 1922, and to 1,049,807 lbs. during the first three months of 1923.

COKE AND PIG IRON (EXPORTS).

Mr. JOHN DAVISON: 15.
asked the President of the Board of Trade the quantities and value of foundry coke and pig-iron exported during the years 1920, 1921 and 1922?

Viscount WOLMER: As the answer contains a table of figures, I will, with the hon. Member's permission, have it circulated in the OFFICIAL REPORT.

Mr. DAVISON: Is the Noble Lord aware that, owing to the exports of coke and pig iron, large numbers of foundry workers in this country are working short time, while the commodities are being exported to Germany and other countries, and what steps will be taken to retain a sufficient supply for home consumption?

Viscount WOLMER: I am aware that that has been the case in the past, but I understand that the producers are taking steps by which they hope that very shortly the supply will equal the demand.

Following is the table promised:

The following table shows the quantities and declared values of coke (other than gas coke) and pig iron, of United Kingdom manufacture registered as exported during the undermentioned years:


Commodity.
Quantity Exported.
Value.


1920.
1921.
1922.
1920.
1921.
1922.






Tons.
Tons.
Tons.
£
£
£


Coke, other than gas coke
902,666
292,648
1,602,671
5,192,723
704,630
2,352,971


Pig Iron and Ferro-Alloys:—


Pig Iron
…
…
…
462,175
103,214
651,212
5,867,675
995,470
3,257,884


Ferro-Alloys

…
…
117,334
32,472
142,704
4,13,026
682,956
1,946,125


Total

…
…
579,509
136,686
793,916
10,002,701
1,678,426
5,204,009

DYESTUFFS.

Major ENTWISTLE: 18.
asked the President of the Board of Trade whether ho is aware that small toy printing sets have been held up under the Dyestuffs Act, on account of the small pads being damped with ink which could not be made without the use of dyestuff material; and whether licences have now to be obtained from the Dyestuffs Committee at Manchester before the London Customs authorities will admit goods of the class in question?

Viscount WOLMER: An open general licence covering these articles was issued in January last. The answer to the second part is in the negative.

MILK POWDER (EXPORTS).

Mr. J. H. SIMPSON: 21.
asked the President of the Board of Trade the quantity and value of dried milk powder exported from Great Britain in the year 1922?

Viscount WOLMER: During 1922 the exports from the United Kingdom of milk powder of home manufacture amounted to 1,020 cwts., valued at 5,602. The re-exports of milk powder of foreign and colonial manufacture during the year amounted to 10,910 cwts., valued at £36,052. These figures are provisional and subject to revision.

STEEL PEN INDUSTRY.

Mr. HANNON: 23.
asked the President of the Board of Trade whether his attention has been called to the extent to which the steel pen industry in this country is suffering in consequence of the large volume of imports of steel pens from the United States into this country; and whether, seeing that the United States is this only country from which
steel pens are imported into Great Britain, and that therefore there would be no breach of the convention of commerce involved, he will impose a duty of 6d. per box of 144 pens?

Viscount WOLMER: I have had no recent complaints as to the effect of competitive imports on the steel pen industry in this country. With regard to the latter part of the question, I would refer my hon. Friend to the Budget statement made yesterday.

Mr. SEXTON: Is the Noble Lord also aware that the original introduction of the Edison phonograph has simply ruined the Birmingham jews-harp industry?

MERCHANDISE MARKS BILL.

Lieut.-Commander KENWORTHY: 10.
asked the President of the Board of Trade the amount and value of fruit and vegetables, respectively, grown outside the United Kingdom and re-exported from British ports during last year; the amount and value of British-grown fruit and vegetables exported during last year; and whether he has considered the effects of the Merchandise Marks Bill now before Parliament on this re-export trade?

Viscount WOLMER: As regards the first and second parts of the question, I am having a statement printed in the OFFICIAI, REPORT. As regards the last part, I am not clear how the obligation to mark cases of fruit or vegetables with the word "imported" can prejudice the interests of the British exporter in the markets to which the produce is sent.

Lieut. - Commander KENWORTHY: Will the Department of the Noble Lord draw the attention of the Minister of
Agriculture to the enormous volume of these imports and the practical difficulty of marketing without extra expense?

Viscount WOLMER: The Board of Trade is satisfied that no injury to the export trade will result.

Lieut. - Commander KENWORTHY: Have the Board of Trade consulted the great importers?

Viscount WOLMER: Yes. The Board of Trade have been in close touch with the commercial community on this matter.

The following is tie statement referred to:

The following statement shows for the commodities specified the quantities and values of (a) re-exports from the United Kingdom of foreign and Colonial pro-due? and (b) exports of United Kingdom produce in the year 1922:


(a) Re-exports of Foreign and Colonial Produce.



Cwts.
£


Fresh fruit and nuts used as fruit, raw
520,105
988,488


Vegetables, raw
316,138
292,464


(b).Exports of United Kingdom Produce.



Cwts.
£


Fruit and nuts used as fruit, raw
4,025
15,139


Vegetables, raw
2,914,947
932,137

NATIONAL BENEFIT ASSURANCE COMPANY.

Mr. A. M. SAMUEL: 11.
asked the President of the Board of Trade whether his attention has been drawn to the Report of the senior official receiver in the matter of the National Benefit Assurance Company; will he say what was the justification for allowing this trading company to be incorporated under the name of the National Benefit Trust and in what way it was national or a national benefit; and whether he will take power to refuse in future to permit the registration of limited companies with the word national in the title or description?

Viscount WOLMER: The answer to the first part of this question is in the affirmative. Under the provisions of the Companies Acts the Registrar has no power
to refuse to register a company on the ground that the word "national" is included in its title, but the question whether legislation should be introduced to confer greater powers upon the Registrar will be noted for consideration. The Registrar reports that about 700 companies have been registered whose titles include the word "national"

Mr. SAMUEL: Will the Noble Lord take steps to have the matter put right, seeing that the word "nationa" is very often used as a catch to obtain money from the poor, and to defraud them?

INDUSTRIAL ASSURANCE.

Mr. TREVELYAN THOMSON: 13.
asked the President of the Board of Trade the estimated number of lapsed industrial insurance policies which occur each year, and the average amount involved?

Viscount WOLMER: The information is not in the possession of the Board of Trade, but I would refer the hon. Member to paragraphs 10, 18 and 41 of the Report of Lord Parmoor's Committee on industrial Assurance (Cmd. 614) and Table IV which is appended to that Report, which give information as to the Industrial Assurance policies lapsed during the year 1913.

Mr. THOMSON: In view of the Importance of the question which is to come before a Committee of this House. can the Noble Lord get more recent information, seeing that information dealing with this matter has been given already in the other Chamber?

Viscount WOLMER: The Board of Trade have no power to obtain the information for which the hon. Member asks.

Mr. THOMSON: is the Committee expected to deal with this matter without any official information or guidance as to the facts?

Viscount WOLMER: It is not in the power of the Board of Trade to obtain this information.

Mr. THOMSON: 14.
asked the President of the Board of Trade the maximum and minimum percentage amounts incurred in expenses by industrial insurance companies in the last completed year for which these figures are available?

Viscount WOLMER: According to the Returns made to the Board of Trade, under the Assurance Companies Act, 1909, for the year ending December, 1921. the maximum percentage of the annual premiums received in respect of industrial assurance business which was applied by any one company in management expenses was 60.5 and the minimum percentage was 36.9.

UNEMPLOYMENT (UNITED STATES).

Mr. HANNON: 19.
asked the President of the Board of Trade whether he can give the number of occupied persons un employed in the United States of America at the time at which the fordney tariff came into operation; and the number unemployed at the present date?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Betterton): I have been asked to reply. Since the United States Government does not publish periodical returns of Lumbers unemployed in the country as a whole, I regret being unable to supply my hon. Friend with the figures he desires.

Mr. HANNON: Will the President of the Board of Trade have inquiries made of the British Consul-General in New York so as to get definite information on the subject?

Sir H. BRITTAIN: Is it not a fact that unemployment in the United States has practically ceased?

Mr. BETTERTON: With regard to the first supplementary question, I will certainly convey the suggestion to the President of the Board of Trade.

COAST EROSION (ROBIN HOOD'S BAY).

Captain SIDNEY HERBERT: 20.
asked the President of the Board of Trade whether his attention has been called to the notices posted by his Department at Robin Hood's Bay and the vicinity forbidding the removal of sand, stone and shingle without the written consent of the Marine Department of the Board of Trade in London; if he is aware that these materials are essential in an outlying district to farmers for the upkeep of
roads and repair of farmsteads and to the local building trade; and if he will take immediate steps for the removal of unnecessary restrictions which give rise to great local resentment and affect a privilege which has been enjoyed for the last 50 years?

Viscount WOLMER: Reports were recently received from the Board's local officers that the removal of materials from the foreshore below high water mark in Robin Hood's Bay was likely to cause erosion of the coast. As the foreshore is Crown property under the management of the Board of Trade, whose consent was therefore necessary to the removals, the notices to which my hon. and gallant Friend refers were issued. In view of the representations made, I propose to instruct one of my professional officers to inspect the locality at an early date, confer with the local interests concerned, and make, a report to me on the subject.

Mr. R. RICHARDSON: Is the Noble Lord aware of the great amount of coast erosion that has taken place, because of the removal of sand and shingle from the beach?

Viscount WOLMER: It is for that reason that the Board of Trade has to be very careful in the matter.

CARRIAGE OF GOODS BY SEA BILL.

Mr. HANNON: 22.
asked the President of the Board of Trade whether the representatives of the sea coasting trade have been consulted in the preliminary discussions which led up to the introduction of the Bill to amend the laws relating to the carriage of goods by sea; and whether, in the present state of trade in this country, he will reconsider a scheme which sets up complicated machinery which will handicap the coasting trade?

Viscount WOLMER: The discussions which led up to the Sea Carriage of Goods Bill took place mainly outside the Board of Trade, and there was no question of the Department consulting particular sections of shipowners or of any other interest concerned. The question whether it is necessary or desirable to make some special reference to the coasting trade in the Bill is one which could be dealt with on the Committee stage of the Bill.

Mr. HANNON: Will the Noble Lord consult the coasting trade to ascertain their views on this very important question?

Viscount WOLMER: The history of this Bill is a series of international and trade conferences. Throughout, the Board of Trade has done its best to bring the parties together and to adjust differences. But we have not been in the position of drafting a Bill and consulting the various interests.

Mr. HANNON: Will the Noble Lord realise the importance of this matter to the people in the coasting trade, in view of the competition of the railways?

Viscount WOLMER: We do fully realise it, and we are now awaiting representations from, the interests concerned as to the modifications they would desire to see made in the Bill to meet their case.

Mr. STURROCK: Is it not a general fact that this Government is pledged absolutely against any sort of measure of Protection? [HON MEMBERS: "No!"]

TREATMENT OF DOGS (CAIRO).

Captain ARTHUR EVANS: 26.
asked the Under-Secretary of State for War if his attention has been directed to the fact that the method employed by the provost-sergeant at Kait-el-Nil Barracks, Cairo, in disposing of stray dogs is to tie them up and beat them to death with a club; and if he will take immediate steps to deal with the non-commissioned officer concerned as the case warrants?

Major Sir BERTRAM FALLE: Befora the question is answered, may I ask whether it is fair and proper on any hon. Member's part, without offering evidence, to accuse anyone of barbarous treatment of dogs in Egypt?

Lieut.-Colonel GUINNESS: I am informed that two dangerous dogs, whose immediate destruction was necessary, have recently been killed by stunning. The General Officer Commanding, Egypt, telegraphs that in his opinion this action was justified in these particular cases, but that the general method is that stray dogs are collected under arrangements approved by the National Society for the
Prevention of Cruelty to Animals, and handed over to the Society for destruction.

Captain A. EVANS: Will the hon. and gallant Gentleman receive privately the information that I have on the subject?

Lieut.-Colonel GUINNESS: I shall be glad of any further information, but really this is an exceptional case, and it was felt better to club possibly mad animals to death rather than risk the troops being bitten.

Commander BELLAIRS: Have the War Office been put to the expense of telegraphing to Egypt, and receiving a telegraphed reply, in order to get this information?

Lieut.-Colonel GUINNESS: Yes.

GOVERNMENT DEPARTMENTS.

WAR OFFICE.

Mr. F. GRAY: 30.
asked the Under-Secretary of State for War whether the number of officers employed at the War Office has been reduced in accordance with the promise of reduction by the 1st of April, 1923, given on 5th December, 1922; and whether he can now inform the House of the basis of further reduction to reduce the officers so employed to at least a pre-War level?

Lieut.-Colonel GUINNESS: I regret that my estimate of 5th December last has not been entirely realised, but a reduction of 20 officers has been made since that date, and further reductions will be carried out as opportunity offers during the year.

DISPOSAL AND LIQUIDATION COMMISSION.

Sir WALTER PRESTON: 62.
asked the Financial Secretary to the Treasury when the disposal of surplus War material will be completed; and will he tell the House what is the difference in personnel, if any, between the Disposal Board and the Liquidation Board, which were dissolved on 31st March last, and the Disposal and Liquidation Commission, which is still functioning?

Major BOYD-CARPENTER: As the answer to this question is of some length, I propose, with my hon. Friend's permission, to circulate it in the OFFICIAL REPORT.

Sir W. PRESTON: Will the pledge given before Easter be carried out?

Major BOYD-CARPENTER: If my hon. Friend will allow me to do as I suggest., and circulate the answer in the OFFICIAL REPORT, he will find that that is the case.

Following is the answer:

I regret I am unable to give a definite answer to the first part of the question, but my hon. Friend may rest assured that every effort will continue to to made to complete disposal at the earliest possible date.

On the 31st March last the personnel was as follows:

Disposal and Liquidation Commission:

Sir Howard Frank, Bt., K.C.B. (Chairman).
Sir Charles C. Barrie, K.B.E., M.P. (Deputy-Chairman).
Sir Nicholas Waterhouse, K.B.E.
Sir Sigmund Dannereuther, C.B.
Sir Daniel Neylan, C.B.E.

Disposal Board:

Sir Charles C. Barrie, K.B.E., M.P. (Chairman).
Mr. W. L. lichens (Deputy-Chairman).
Mr. H. C. Cole, C.B.E.
Mr. R. L. Corbett, C.B.E.
Mr. F. Lindsay Fisher.
Major-General the Rt. Hon. Sir L. B. Friend, K.B.E., C.B.
Sir William Larke, K.B.E.
Sir Maurice Levy, Bt.
Sir Charles L. Morgan, C.B.E., M. Inst. C. E.
Sir Daniel Neylan, C.B.E.
Lieut.-Colonel the Hon. F. V. Willey, C.B.E., C.M.G., M.V.O.

Liquidation Board:

Sir Nicholas Waterhouse, K.B.E. (Chairman).
Mr. L. J. Coates.
Sir Sigmund Dannereuther, C.B.
Mr. F. J. H. Palmer, O.B.E.

As from the 1st April, Mr. W. L. lichens and Sir Maurice Levy have been added to the Commission.

On the 31st March last, as my hon. Friend is aware, the Disposal Board and the Liquidation Board ceased to exist.

MINISTRY OF TRANSPORT.

Mr. BECKER: 74.
asked the Parliamentary Secretary to the Ministry of Transport when the Ministry of Transport shall cease as a separate Ministry and its functions be transferred to the Board of Trade, as recommended by the Committee of National Expenditure?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Colonel Ashley): I am not able to state whether the existing arrangements, by which the First Commissioner of Works acts as Minister of Transport without additional salary, will be altered in favour of the transfer to the Board of Trade, as recommended by the Committee on National Expenditure.

TERRITORIAL ARMY (MARRIAGE ALLOWANCES).

The Marquess of TITCHFIELD: 40.
asked the Financial Secretary to the War Office whether, in view of the dissatisfaction in Territorial units that marriage allowances are only granted to men of 26 years and over, he can see his way to extend the allowance to men under that age?

Lieut.-Colonel GUINNESS: I much regret that, after very full consideration, it has not been found possible to adopt this proposal, which would cost about £35,000 a year.

SCOTLAND.

SCHOOLS (SIZE OF CLASSES).

Mr. NICHOL: 41.
asked the Under-Secretary to the Scottish Board of Health the number of classes in State-aided schools in Scotland which have on the register more than 60, 70, 80, and 90 children, respectively?

Captain ELLIOT (Parliamentary Under-Secretary for Health, Scotland): As I have previously informed the hon. Member, the information asked for could only be obtained by means of a special inquiry. My Noble Friend the Secretary for Scotland has, however, consulted the chief inspectors of schools, who are satisfied that there is no appreciable contravention of the Regulation which provides
for not more than 60 children being habitually under the charge of one teacher.

Mr. NICHOL: Is the hon. and gallant Gentleman aware that in at least one case under the Glasgow Education Authority it is reported that there is a class of 93 under the charge and in the care of one teacher, and, further, is his Department keeping trace of the effects of their economies?

Mr. SPEAKER: Perhaps the hon. Member will put that question down.

EDUCATION AUTHORITIES (GRANTS).

Mr. NICHOL: 42.
asked the Under-Secretary to the Scottish Board of Health if he is aware that considerable trouble has arisen owing to the confusion caused by the Scottish Education Department approving of expenditure by local education authorities and subsequently maintaining that such approval does not include approval for purposes of grant; and if he is prepared to revert to the former usage of the Department, namely, that approval connoted approval for purposes of grant?

Captain ELLIOT: Grants to education authorities in Scotland are not now based upon expenditure, and the conditions referred to in the question no longer apply. I am sending the hon. Member a copy of the present Regulations.

Mr. NICHOL: Is the hon. and gallant Gentleman aware that the old Regulations do hold, so far as retrospective payments are concerned, and that they are very prejudicial to some of the authorities, in estimating for the present year?

Captain ELLIOT: It seems to me that this question was dealt with in the answer already given. The question of retrospective effect is scarcely one upon which I can enter at the moment, but I shall be glad to discuss it with the hon. Member.

BORING OPERATIONS, LINLITHGOW (COMPENSATION CLAIM).

Mr. SHINWELL: 43.
asked the Under-Secretary to the Scottish Board of Health whether he is aware that Mr. Matthew Harkins, who occupied one of the small-holdings at. Parkhead, Linlithgow. in 1921, had his crops destroyed by -water as a result of boring operations
by the Board of Agriculture; that Mr. Harkins instituted proceedings for compensation, which were rejected on the ground that the Government could not be sued; and whether, in view of the circumstances, he will advise that Mr. Harkins should be compensated for the actual damage done?

Captain ELLIOT: I am informed that the holder concerned did not suffer any damage from the boring operations except the temporary loss of the use of a small area of cultivable ground. In proceedings instituted by the Board of Agriculture for the recovery of a sum due by the holder after he had abandoned the holding he made a counter claim for compensation which was repelled by the Court on the ground stated in the second part of the question. The Board offered as compensation a sum of £1 which was deemed by the Court to be ample. It is not proposed to increase the amount so offered.

ECCLESMACHEN SCHOOL (TITLE DEEDS).

Mr. SHINWELL: 44.
asked the Under-Secretary to the Scottish Board of Health whether he is aware that the Linlithgow education authority have been informed by the agents for the Marquess of Linlithgow that the title deeds of Ecclesmachen school and schoolhouse were not in existence, and that therefore the property belonged to him; whether he is aware that a claim has also been lodged in respect of rent for the past four years if he can state whether any title deeds for this property are in existence; and if he will ask the Marquess of Linlithgow to produce any title deeds which arc in his possession for examination before the property is taken out of the hands of the education authority?

Captain ELLIOT: The answer to the first three parts of the question is in the negative. With regard to the last part, my Noble Friend is not aware of any authority under which he could take the action referred to.

Mr. SHINWELL: With regard to the first three parts of the question, is it not the case that a communication has been sent by the agent of the Marquess of Linlithgow to the education authority, on the lines indicated; and, having regard to that circumstance, will the hon. and gallant Gentleman give the matter immediate attention?

Captain ELLIOT: The agent has not notified the Scottish Office of such a communication and neither has the Education Department, therefore we are without official knowledge of the facts to which the hon. Member refers.

Mr. SHINWELL: If the facts are as stated, having regard to the effect on the education authority, will the hon. and gallant Gentleman take steps to put the matter right?

Mr. SPEAKER: That is a hypothetical question. The hon. Member should first get the facts.

LEITH BURGH.

Captain W. BENN: 64.
asked the Under-Secretary to the Scottish Board of Health whether it is proposed to make a new Order incorporating the Parliamentary Burgh of Leith with the City of Edinburgh; whether such an order requires Parliamentary sanction; and, if not, whether the decision of the House will be invited on the matter?

The SOLICITOR-GENERAL for SCOTLAND (Mr. F. C. Thomson): There is no power to make an Order of the nature mentioned by my hon. and gallant Friend. What he probably has in view is the Order made by the Secretary for Scotland on 19th March last under the powers contained in Sub-section (16) of Section 43 of the Representation of the People Act, 1918, fixing Edinburgh as the place of election for the Parliamentary Burgh of Leith. Orders under the Sub-section referred to do not require Parliamentary sanction.

Captain BENN: May we take it that the ancient burgh of Leith will remain an independent Parliamentary burgh?

Mr. THOMSON: This Order in no way effects the existence of Leith as a separate and independent Parliamentary area.

GENERAL SUPERINTENDENT OF THE POOR (NORTHERN DISTRICT).

Mr. MACPHERSON: 65.
asked the Under-Secretary to the Scottish Board of Health whether the General Superintendent of the Poor for the Northern District has been transferred; whether it is the policy of the Department to delegate his duties to the local officers of the National Health Insurance Commissioners, now merged in the Board of
Health; and whether he is aware that any such delegation of important Poor Law administration to officials who have no skilled knowledge of Poor Law administration is causing disquiet in the minds of those interested in such adminstration, and is contrary to the views expressed by the Royal Commission on the Poor Laws and Relief of Distress, 1909?

Captain ELLIOT: It is the case that the General Superintendent of Poor for the Northern District has been transferred to another district and that the District Inspector of the Scottish Board of Health for Health Insurance purposes resident in Inverness has been appointed General Superintendent for the Northern District; he will also exercise supervision over the insurance work in the district. I am aware that representations have been made against, this arrangement by several bodies interested in Poor Law administration in Scotland, but in making the appointment, as a result of which a considerable economy will be effected, the Board considered most carefully every aspect of the question and they were satisfied that the special qualifications of the official appointed, his knowledge and experience of the district, his acquaintance with a considerable part of the worn of the General Superintendent for the Northern District, and his knowledge of Gaelic made him particularly suitable for the post.

Mr. MACPHERSON: Is the hon. and gallant Gentleman aware that the group I represent here are satisfied that if it was necessary to make this appointment no better man could have been appointed than Mr. Beaton: but is the Department satisfied it was wise to go against the views expressed clearly in the Report of the Royal Commission of 1909?

Captain ELLIOT: Yes, Sir, the Board had the Report under very careful consideration before making the appointment.

FISHING INDUSTRY (DEPRESSION).

Sir A. SINCLAIR: 67.
asked the Under-Secretary to the Scottish Board of Health whether, in view of the difficulty experienced by Scottish fishermen, after three years of depression in the industry, during which they have been unable to make provision for capital depreciation in replacing their lost and damaged gear,
the economic loss to the country if available boats and crews are not employed, and the cost to the national Exchequer and the local funds for relieving the consequent distress, the Government will select some method, either by an extension of the powers of the Unemployment Grants Committee or under the Trade Facilities Act, or under Section 32 of the Crofters Holding (Scotland) Act, 1886, by which loans may be granted in time to enable fishermen to tide over this crisis and to engage in the summer fishing?

Captain ELLIOT: I would refer the hon. and gallant Member to my reply on the 27th February to his question regarding loans under the Crofters Holdings Act. I can hold out no prospect of the provision of loans for the purchase of gear either through the Unemployment Grants Committee or under the Trade Facilities Act.

Sir A. SINCLAIR: Is the hon. and gallant Gentleman aware that since he gave the answer to which he refers the position is very much worse? The storms that have occurred in the spring have swept away a great deal of the gear of these men. Will the hon. and gallant Gentleman not consider putting into force the powers that he has under existing Acts of Parliament?

Mr. SHINWELL: Is the hon. and gallant Gentleman aware that on Saturday last more than 200 persons left the Hebrides for Canada, many by means of Government assistance, because they found themselves unable to make a living in their own land?

Captain ELLIOT: I quite agree that the position of the fishermen whose gear has been swept away in storms is a very serious one, but if the Government is to take action to repair the damage caused by storms they would have claims extending far beyond those of the fishing industry.

Mr. MACPHERSON: But are there not funds available for this particular purpose.?

Captain ELLIOT: No; certainly that is the difficulty. So far there were funds in which we- could have exercised those powers, they have been exhausted.

Sir A. SINCLAIR: Owing to the very unsatisfactory reply I beg to give notice
that I shall call attention to the matter at the first opportunity on the Adjournment.

CONSTANTINOPLE (SALE OF ALCOHOL).

Colonel WEDGWOOD: 45.
asked the Prime Minister whether our representative in Constantinople protested against, or joined in any protest against, the prohibition of the sale of, alcohol in Constantinople in accordance with Turkish law; and, if so, whether that protest was made- on instructions from His Majesty's Government?

Mr. R. McNEILL: The Allied High Commissioners at Constantinople recently caused a verbal notification to be made to the Turkish authorities to the effect that, pending the ratification of the Treaty of Peace whereby economic matters will he definitely settled, they could not admit of any interference by the Turkish authorities with the existing rights of subjects of the occupying Powers in matters of this nature. The action of the British High Commissioner in this matter has the approval of His Majesty's Government.

Colonel WEDGWOOD: May I ask why His Majesty's Government objects to the prohibition of the sale of alcohol in Constantinople?

Mr. McNEILL: I did not say the Government objected to the prohibition of the sale of alcohol in Constantinople. What I said was that they could not admit any infringement of the rights of the occupying Powers, pending the ratification of the treaty of. peace.

PENSIONS APPEAL TRIBUNALS.

Mr. SEXTON: 46.
asked the Prime Minister if he is a-ware of the increasing number of cases of ex-service men being disallowed by the pensions appeal tribunals, notwithstanding the fact that many of them were passed fit for active service by the Army medical officers at the time with the knowledge that the germs of a disease existed in the men, and was aggravated by Army service, which required treatment in the hospitals until pre-War normal physical conditions were restored; that on their return to civil life after demobilisation the aggrava-
tion owing to reduced stamina and necessary physical exertion in their ordinary industrial occupation again developed, and in consequence of which their appeal for pensions or allowances have been disallowed, as in the cases of ex-Privates Pownall, Sam, and Hewitt, of St. Helens, Lancashire, and from which there is no appeal; whether he is aware that these appeal courts are held locally in most provincial cases and not by the central tribunal, House of Lords; and, if under these circumstances, he will consider the advisability of a complete revision of the constitution of such tribunals?

The CHANCELLOR of the EXCHEQUER (Mr. Baldwin): I am not aware that there has been any material increase in the number of appeals disallowed by the pensions appeal tribunals for England and Wales. Aggravation of pre-War disabilities is not necessarily of a permanent character, and it does not follow that a recurrence after the War of a pre-War disability is due to aggravation during War service. It is the duty of the tribunals to hear the evidence on the question, and to decide upon it, and this has been done in the cases of ex-Privates Pownall and Hewitt. In the case of ex-Private Sams the Ministry of Pensions held that his rheumatism was attributable to service and a final award was made. He appealed against the amount of this award to the pensions appeal tribunals who upheld the assessment of the Ministry. The pensions appeal tribunals sit in such places as the Lord Chancellor, after consultation with the Minister of Pensions, determines, and the places of sitting are arranged so as to meet, so far as possible, the convenience of the majority of the appellants. The central office of all the tribunals for England and Wales is at the House of Lords. The constitution of the tribunals is laid down by Act of Parliament, and it is not proposed to revise it.

Mr. SEXTON: Will the right hon. Gentleman consider cases which I submit to him, if I produce new evidence showing that the disease which the man had previous to joining up has developed since his demobilisation owing to service? Will he consider such cases, which have been turned down by the tribunal?

Mr. HOGGE: Will the Chancellor of the Exchequer, even if he does not take such steps as he has indicated, at least consider cases in which the appellant can produce fresh evidence—evidence which has not been heard by the appeal tribunal? Seeing that the appeal tribunal is a final tribunal, will the right hon. Gentleman, where such fresh evidence is produced, have the cases re-opened?

Mr. BALDWIN: I will look into the point. Hon. Members will recognise that this is a subject with which I am not very familiar.

GREAT BRITAIN AND UNITED STATES (AIRCRAFT PATENTS).

Sir GEORGE HAMILTON: 49 and 50.
asked the Chancellor of the Exchequer (1) whether, seeing that His Majesty's Government has had to pay large sums to British patentees for the use of their patents by the United States of America after the United States had entered the War, he will say approximately what sums were and will be so paid; whether the United States will refund to this country such payments;
(2) whether the British Government has been called upon by the United States of America to pay for the use of aircraft patents which were taken out in America before the United States entered the War; and whether he is aware that the British Government, to assist the United States, informed them that they could use any British patents which would assist them in the War?

Major BOYD-CARPENTER: After the entry of the United States of America into the War in 1917, it was found necessary, in order to increase the common output of aeronautical material, to manufacture in America certain types of British aeroplanes, engines, and accessories. This course involved the disclosure to American manufacturers by British aircraft firms of certain patents, designs, and specifications, and also the supply of technical information and assistance. The War Cabinet decided that His Majesty's Government should be responsible during the War for any consequential financial arrangements to be made with the British manufacturers, the United States Government accepting financial liability arising in respect of
post-war production in that country. The total sum paid and payable by His Majesty's Government under this arrangement is approximately £105,000, which is no; recoverable from the United States of America. Only a trifling proportion of this amount., approximately £300, is for the use of aircraft patents taken out in America before the United States of America entered the War.

Sir G. HAMILTON: 51.
also asked the Chancellor of the Exchequer whether there are now pending large claims for royalties in respect of alleged infringement by the British Air Force of patents owned by the Curtiss Aeroplane Company, which is an American company; and whether the United States of America have undertaken to pay any compensation which may be given against the British Government for the use of such patents?

Major BOYD - CARPENTER: The Curtiss Aeroplane Company presented, but subsequently withdrew, a claim in respect of the use of their patents; they have, however, now made a claim for an ex gratin award in respect of the use of their designs of flying-boats and of services rendered by them. The claim relates substantially to the early part of the War, 1915–16, before the United States became a belligerent. There is no ground upon which the United States Government could be asked, nor has that Government undertaken, to repay any compensation which may be payable by the British Government to the company.

Mr. HARDIE: May I ask whether the British patents being used during the War in America came under the protection of the American patent laws or remained under the protection of the British patent laws?

Major BOYD-CARPENTER: I think that has been answered in reply to Question No. 49.

Mr. HARDIE: No, it was not.

LAND PURCHASE ARREARS (IRELAND).

Colonel NEWMAN: 52 and 55.
asked the Chancellor of the Exchequer (1) whether he can give the total sum in arrear and the number of individuals who have failed
to meet their obligation with regard to the annuities payable to the British Exchequer in respect of moneys advanced for the purchase of farms by their holders under the various Irish Land Purchase Acts; what method the British Exchequer adopts to recover annuities due by citizens of the Irish Free State who fail to make payment;
(2) whether he can give the total sum in arrear and the number of individuals who have failed, during the past financial year or other convenient period, to meet their obligation with regard to the annuities payable to the British Exchequer in respect of moneys advanced for the purchase of their farms under various Land Purchase Acts; and will he say what method he intends to adopt to recover annuities due by citizens of the Irish Free State should they make default?

Major BOYD-CARPENTER: The total arrears due to the Irish Land Commission at the 21st March, 1923, in respect of land purchase annuities payable by tenant purchasers in the Irish Free State was £502,920, but it is not at the moment possible to state the number of persons who contribute to this arrear. The deficiencies caused by these particular arrears, in the case of all advances made under the Land Purchase Act of 1891 and subsequent Acts, have already been made good from the Irish Land Purchase Guarantee Fund created for this purpose under the Land Purchase Act of 1891. As from the 1st April, 1923, the Free State Government have undertaken to pay to the appropriate British fund the full amount of the annuities accruing due from time to time, making themselves responsible for the actual collection from the tenant purchaser. The British Exchequer will, therefore, not be affected by any failure on the part of a citizen of the Free State to make the payment due on account of his annuity.

Sir JOHN BUTCHER: Have we any guarantee or any method of assuring that the Free State make these payments to the British Exchequer?

EX-SERVICE MEN.

CIVIL SERVICE (COMMITTEE OF INQUIRY).

Mr. HOGGE: 54.
asked the Chancellor of the Exchequer whether he will extend
the reference to the Committee set up to consider the working of the recommendations of the Lytton Report to admit of it making further recommendations itself as a result of its inquiry; and whether he can now say who is to be chairman of the Committee, and who are to be members?

Major BOYD-CARPENTER: With regard to the first part of the question, it seems unnecessary to extend the terms of reference of the Committee, but it will be open to the Committee, if they find that difficulties have arisen in the application of the recommendations of the Lytton Committee, to suggest what amendments or modifications are desirable in order to give full effect to the policy of preferential treatment of ex-service men which the Lytton Committee recommended. As regards the second part of the question, I am doing my utmost to expedite the formation of the Committee, and I hope that it will be possible to publish the names of the chairman and members within the next few days.

LAND SETTLEMENT (SCOTLAND).

Major Sir A. SINCLAIR: 66.
asked the Under-Secretary to the Scottish Board of Health whether he is yet in a position to announce the terms of reference to the Land Court in connection with the readjustment of the rent and interest charges to be paid by ex-service men on holdings constituted by the Board of Agriculture for Scotland since the War?

Captain ELLIOT: For holdings constituted by the Board of Agriculture during the four years ending Martinmas, 1922, the Land Court will be asked to assess the present value, as to an incoming holder, of the buildings, keeping in view that any loans advanced by the Board to holders will be repayable over a period of 50 years by means of an annuity of £4 per £100 borrowed, payable half-yearly in equal instalments at the terms of Whitsunday and Martinmas. The Court will also be asked to fix the term of Whitsunday or Martinmas from which annuities in repayment of loans based on the Court's valuation should be collected. As regards holdings on estates owned by the Board, the Land Court will also be asked to fix the fair rents and the terms from which rents should be collected.

Sir A. SINCLAIR: Will the tenants have the right to be made statutory small tenants, instead of landholders, if they want it?

Captain ELLIOT: I am afraid I must ask for notice of that question.

OLD AGE PENSIONS.

Mr. OLIVER: 56.
asked the Chancellor of the Exchequer if he can give the number of persons and the amount surrendered by old age pensioners, during the past year, who have forfeited their pensions in consequence of becoming inmates of workhouses or other Poor Law institutions?

Major BOYD-CARPENTER: There is no available information as to the number of old age pensions withdrawn on account of the receipt of disqualifying Poor Law relief, but during the year ended 31st March, 1922, the number of claims to pensions disallowed and the number of pensions withdrawn on that account in Great Britain, taken together, were 13,459. The amount of old age pension represented thereby cannot be given.

BUDGET.

PATENT MEDICINE STAMP DUTY.

Major ENTWISTLE: 57.
asked the Chancellor of the Exchequer if he is aware that, according to the construction placed by the Customs and Excise Department upon the provisions of Section 3 of the Patent Medicine Stamp Duty Act, 1812, makers of chemical preparations sold under a fancy name, by not claiming proprietary rights, are able to avoid the incidence of the ad valorem patent medicine stamp duty; and whether, in view of the large loss to the Revenue resulting therefrom, he will take necessary steps to ensure the payment of the duty in such cases?

Major BOYD-CARPENTER: The question whether any particular medicine is liable to Medicine Stamp Duty depends on a number of considerations. If the hon. and gallant Member will furnish me with particulars of the cases he has in mind I will have inquiry made.

Major ENTWISTLE: If I give these particulars of articles which are imita-
tions, will the hon. and gallant Gentleman see to it that these imitated articles should not escape duty, and so unfairly compete with the genuine articles?

Major BOYD-CARPENTER: I will look into the matter, if the hon. and gallant Member will let me have particulars.

SAFEGUARDING OF INDUSTRIES ACT (DUTIES).

Major ENTWISTLE: 58.
asked the Chancellor of the Exchequer what is the number of commodities which are affected by the Order, dated the 15th February, 1923, made by the Treasury under Section 10 of the Finance Act, 1922; what was the number of transactions passing through the Customs in respect of such commodities during the year 1922; and what was the total amount of revenue derived from the duties under the Safeguarding of Industries Act levied on such-commodities during the said period?

Major BOYD-CARPENTER: As the headings of the Schedule to the Order in question are in general terms, it is not possible to enumerate the particular commodities which may be affected, or to furnish the information sought by the.second and third parts of the question.

Major ENTWISTLE: Is the hon. Gentleman not aware that the information sought for would reveal the absolute futility of the Safeguarding of Industries Act?

HEALTH AND UNEMPLOYMENT INSURANCE.

Mr. BUTTON: 59.
asked the Chancellor of the Exchequer when the final Report may be expected of the Committee appointed on the 23rd January, 1922, to consider the relations of health insurance and unemployment insurance and to investigate the possibility of reducing the total cost of administration by modifying the unemployment insurance scheme, and by amalgamating unemployment and health insurance cards, records, and, as far as possible, administration; and whether the Committee are considering the possibility of transferring the administration of unemployment insurance to the Ministry of Health?

The MINISTER of HEALTH (Mr. Neville Chamberlain): With regard to the
first part of the question, I am not in a position to add anything to the reply given by the Parliamentary Secretary to the Board of Trade to the hon. Member for Westhoughton (Mr. Rhys Davies) on the 28th February last. The answer to the last part of the question is in the negative.

Mr. R. MURRAY: 63.
asked the Under-Secretary to the Scottish Board of Health whether he is aware that health insurance committees in England have powers, not conferred upon health insurance committees in Scotland, which enable English insurance committees to pay the expenses of complainers and witnesses attending meetings of medical service sub-committees; and whether such powers can be conferred upon insurance committees in Scotland, in view of the fact that the attendance of complainers and witnesses before the medical service sub-committees is recognised to be, in many cases, essential to a proper judgment of the cause of complaint?

Captain ELLIOT: While it is understood that. the Ministry of Health have authorised the payment by insurance committees of the costs of attendance of complainers and witnesses at hearings by the medical service sub-committee, the position in Scotland is met by the provision made in Article 32 (6) of the Medical Benefit -Regulations for the holding of local inquiries, and the Board have had no representations that this provision has not adequately met the circumstances of any case that has arisen in Scotland.

Mr. BUTTON: 60.
asked the Chancellor of the Exchequer the relative costs of administration of national health and unemployment insurances per person insured?

Major BOYD-CARPENTER: The total costs of administration (central and local) in the two cases are at present.



Per insured person.



s.
d.


National health insurance
6
8


Unemployment insurance
7
1

MINES (DRY ROCK-DRILLS).

Mr. GAVAN DUF FY: 70.
asked the Secretary for Mines under what special
Regulations made under the Metalliferous Mines Act provision is made for the introduction of, the use of, and the conditions governing the use of dry rock-drills in the iron-ore mines; and whether, having regard to the wide differences of opinion existing among medical and other experts as to the extent of the injurious effects caused by their use and the belief of the men who use them that they are injurious, he will insist upon approved water-spraying boring-drills being used in all iron-ore mines where dry rock-drilling machines are now in use or may be used in the future?

The SECRETARY for MINES (Lieut.-Colonel Lane-Fox): There are no special Regulations under the Metalliferous Mines Act governing the use of dry rock-drills in the iron-ore mines. As I informed the hon. Member on the 7th March, I am taking the views of my Health Advisory Committee on this subject, and when I receive their report I will inform the hon. Member of the result.

Mr. DUFFY: If it is really true that without. law and without regulation the illegal and dangerous use of these dry rock-drills is being persisted in day after day and supported by the Mines Department, if there are no laws and no regulations, will the practice be discontinued at once?

Lieut.-Colonel LANE-FOX: If there is no law, obviously there cannot be anything illegal.

MEMBERS OF PARLIAMENT (SALARY).

Mr. CHARLES WHITE: 61.
asked the Financial Secretary to the Treasury how many hon. Members of the House of Commons refuse to accept the salaries which they are entitled to receive as Members of Parliament?

Major BOYD-CARPENTER: The number of Members of the House of Commons who refuse to accept the salaries to which they are entitled as Members is six.

Mr. WHITE: Will the hon. Gentleman be good enough to give the House the names of these altruistic heroes, so that we may identify them when they come into our constituencies and condemn these payments?

Mr. MARDY JONES: Will the hon. Gentleman make arrangements with the Chancellor of the Exchequer to transfer the salaries of those who refuse them to those who are prepared to take them

COAL MINES (SHOT-FIRING).

Mr. LUNN: 72.
asked the Secretary for Mines whether the Departmental Committee which he has appointed to consider the effect of shot-firing in coal mines will study the subject below ground, of drilling and firing in both stone and coal, and particularly the effect of shot-firing in an atmosphere charged with coal dust; and whether the inquiry will he at one colliery or at collieries in various districts, or whether the investigations will be confined to the Department's testing station at Eskmeals?

Lieut.-Colonel LANE-FOX: The object of the work that the Explosives Research Committee is carrying out is to prevent the initiation, by shot-firing, of explosions of firedamp and coal dust. The work is being done at the Mines Department Experimental Station and at laboratories there and elsewhere. It would be dangerous to experiment below ground in collieries. The physiological effect on mine workers of stone dusts of various kinds have been and are still under research by Dr. Haldane for the Medical Research Council, and my Health Advisory Committee is also considering the effects of drilling in ironstone mines.

Mr. LUNN: Is it the intention of the Committee which the hon. and gallant Member is going to set up to go down the mines to see the effect of firing, the possibilities of the future, and the effects upon the men concerned? Will he also appoint a Committee to consider the effect of drilling, not only in iron-stone mines, but also in the stone of coal mines?

Lieut.-Colonel LANE-FOX: As to setting up another Committee I will consider that point. As regards the work of the Explosives Research Committee, I cannot regulate the action they will take, but I have no doubt that they will go thoroughly into all matters.

Mr. HARDIE: Does the Secretary for Mines not realise that there is no relation
between any experimental tube of coal dust and the condition obtaining in mines?

Mr. D. GRENFELL: Has the Secretary for Mines had his attention called to the very high death-rate among those employed on compressed-air boring machines in coal mines during the last 10 years?

Lieut.-Colonel LANE-FOX: Yes, Sir. That is the reason why the whole matter is being investigated now.

ROAD VEHICLES (TAXATION AND REGULATION COMMITTEE).

Sir DOUGLAS NEWTON: 73.
asked the Parliamentary Secretary to the Ministry of Transport if he is aware that. the Departmental Committee on the Taxation and Regulation of Road Vehicles is not fully representative of all sections of the motor industry, as the motor-cab trade of Great Britain, which comprises some 40,000 vehicles, has no representative on the Committee; and whether he will take steps to remedy this omission by appointing a representative of this important section of the motor trade of the country?

Colonel ASHLEY: I cannot admit that the Committee is not fully representative of the motor industry. It is impossible, however, to give representation to every sectional interest without making the Committee too unwieldy. The Joint Committee of the Motor-Cab Trade of Great Britain have been invited to tender evidence before the Committee and their witnesses have been heard, In the circumstances. I regret that I cannot accept my hon. Friend's suggestion.

Sir H. BRITTAIN: Should not these men, who constitute a very large body, be represented on this Committee, because their very livelihood depends upon it?

MID-SCOTLAND SHIP CANAL.

Mr. PETO: 75.
asked the Parliamentary Secretary to the Ministry of Transport whether his attention has been called to the fact that after the Napoleonic Wars, in order to check the widespread unemployment and vast emigration from the Highlands of Scotland to America, Government undertook the construction
of the Caledonian Canal; and whether they are proposing to take similar action at the present time in order to provide employment by the construction of the mid-Scotland ship canal?

Colonel ASHLEY: The original Act for the construction of the Caledonian Canal was passed in 1803 and that Act refers only to advantages which would accrue to navigation. I believe, however, that it is the case that the construction of the canal was also urged on the grounds mentioned by my hon. Friend. With regard to the last part of the question, I have nothing to add to the answers given to recent questions on the subject.

QUARRY INDUSTRY (FAIR WAGES).

Major PAGET: 77.
asked the Parliamentary Secretary to the Ministry of Transport whether, in view of the evidence which he now has received from the Joint Industrial Council, No. 7 District, of the quarry industry, of certain local authorities obtaining stone for roads from contractors and others who do not pay the fair wage, he will say what steps he is taking or has taken in view of his recent statement about fair wages?

Colonel ASHLEY: The evidence submitted by the Joint Industrial Council, No. 7 District, is of a comprehensive character, covering as it does 34 instances in 10 or more counties. These numerous particulars are being investigated, but until the investigation has been completed, I cannot forecast what action may be found to be necessary.

Major PAGET: Will the hon. and gallant Member inform me when the investigations are complete and what will be done?

Colonel ASHLEY: I will certainly communicate privately with my hon. and gallant Friend.

Mr. W. THORNE: Are these contractors working under the Fair Wages Clause adopted by the House of Commons?

Colonel ASHLEY: In some cases they do, and in some case I believe they do not.

Mr. THORNE: Why not?

BUSINESS OF THE HOUSE.

Mr. J. RAMSAY MacDONALD: I wish to ask the Chancellor of the Exchequer a question about the business for Thursday. In view of the fact that the President of the Board of Trade is to be abroad, and in view of the fact that it is very desirable that the Norfolk dispute and other agricultural matters should be dismissed without delay in this House, representations should be made for an alteration in the Votes set down for Thursday, so that we may discuss the Board of Agriculture Vote, instead of the Vote for the Mines Department?

Mr. BALDWIN: I understand that the business arranged for Thursday is the Ministry of Agriculture and Fisheries Vote, Class IT, Vote 14.

Mr. PRETYMAN: Would it be possible, in view of the fact that the Ministry of Agriculture Vote is to be taken on Thursday, to make an arrangement to discuss the Report of the Economic Tribunal? It would be very difficult to discuss the Ministry of Agriculture Vote, without discussing that Report. I am not quite sure what are the rules of Order on this point. I do not, know whether you, Mr. Speaker, could give us any guidance in the matter?

Mr. SPEAKER: The House will be in Committee, and I cannot interfere with the province of the Chairman of Ways and Means.

Mr. PRETYMAN: I do not know whether the Chairman of Ways and Means is in the House? If so, can he give us any guidance in this matter?

Mr. SPEAKER: I have no doubt that the Chairman of Ways and Means will endeavour to meet the convenience of the Committee as far as possible.

NEW MEMBER SWORN.

Sir ROBERT JOHN THOMAS, Baronet, for the County of Anglesey.

BILLS PRESENTED.

ADOPTION OF CHILDREN BILL,

"to make further provision for the adoption of children by suitable persons,"
presented by Sir LEONARD BRASSEY: supported by Sir Ernest Pollock, Sir Ryland Atkins, Sir Robert Newman, Lieut.-Colonel Courthope, and Mr. Hopkins; to be read a Second time upon Monday next, and to be printed. [Bill 90.]

MARRIAGE ( PROHIBITED DEGREES OF RELATIONSHIP) BILL,

" to amend the Law relating to the marriage of persons with their nephew or niece by marriage," presented by Major ENT WISTLE supported by Sir Arthur Shirley Benn, Mrs. Wintringham, Mr. William Graham, Mr. Hogge, Mr. Charles Crook, Sir Harry Brittain, Mr. Samuel Pattinson, Major Brown, and Mr. Mardy Jones; to be read a Second time upon Monday next, and to he printed. [Bill 91.]

CO-PARTNERSHIP.

Mr. PETO: I beg to move
 That leave be given to bring in a Bill to promote the more general adoption of co-partnership between capital and labour by statutory and other companies.
At first sight it may seem that such a Bill as this has only a very remote connection with the main Debate which will take place this afternoon, but, in his concluding remarks yesterday the Chancellor of the Exchequer said that industrial peace would do more for trade than the reduction of taxation, and I hold, therefore, that a Measure calculated to promote industrial peace is certainly not remotely connected with the financial position of this country and with its annual Budget. I have adopted the now somewhat disused practice of putting in a short Preamble to this Bill, and, as it consists of only a few words, I will ask the House to allow me to read it. It is as follows:

Whereas there is great loss to the industries of the country by the opposition of capital and labour, and whereas such opposition increases the cost of production and the prices of all commodities, and whereas it is desirable to restore to the wage-earning classes human interest in life and work and to place them in a position of economic equality with every other class,

I desire that this Bill be enacted. I avoid laying down any standard scheme. I avoid anything of the nature of compulsion. I proceed, in Clause 1, to set up a body of five persons who are to be
called Industrial Co-partnership Commissioners, and the Clause further provides for the payment of salaries and expenses by fees approved of by the Chancellor of the Exchequer, so that, therefore, 110 burden is imposed on the national finances. I would call the attention of hon. Members to the method of nominating these Commissioners. One would be nominated by the Trade Union Council, one by the Federation of Employers in British Industries, one by the Labour Co-partnership Association, one by the President of the Board of Trade for the time being, and one, who would be Chairman, by the Chancellor of the Exchequer for the time being.
In Clause 2, I provide that the company or companies in. question may refer schemes for the division of profits between capital and labour to these Commissioners, and I would ask the permission of the House to read one or two of the provisions of that Clause. Subsecton (1) provides that such companies may make provision, by a scheme to be submitted to the Commissioners, for the division of profits between capital and labour employed by those companies, in such ratio, at such times, and in such manner in all respects as the Commissioners may approve. In Sub-section (2) it is laid down that every such scheme shall provide for payment to all employés of the company, in addition to any share in profits, of wages at rates not being less than the rates commonly paid in the district where the company carries on its business; for the fixing of a basic rate of interest on capital which shall bear relation to the risks involved in the business; for the investment of some part, being not less than one-half, of the employés bonus in the capital of the company; and that the employé's bonus, whether paid in cash or in stock or shares of the company, will not be liable to forfeiture for any legal act or omission of the employé. Sub-section (2) provides that. in deciding whether or not they will approve of such a scheme under this Clause, the Commissioners shall be entitled to take into consideration whether the employés who are to work under the scheme have been consulted with regard to it and have approved of it. The next Sub-section provides for the affixing of a certificate, much in the same manner as the Registrar of Friendly Societies certifies a friendly society. The only other
Sub-section of this Clause to which I shall refer is one which states exactly to what sort of companies the Bill will apply. The Bill is to apply to companies engaged in production, and is not to apply to any banking, finance, insurance, or investment company, or to any other company which for the main purpose of its undertaking employs only clerical labour, or to any company engaged in wholesale or retail distribution.
I now come to Clause 3, which provides the inducement or the method by which I hope much greater advantage will be taken of the system of co-partnership. The Clause provides that a company which puts before these Commissioners a scheme which is approved and certified will be assessed to and charged with Income Tax at three-fourths of the ordinary rate, and that it will be charged for stamp duty on the issue of capital at one-half the ordinary rate of Stamp Duty.
Clause 4 provides what I think is a most important use of the power that the Government and local authorities have of promoting anything which they believe to be for the common good. It provides that, after the lapse of a year from the passing of the Measure, a preference shall be given, in the placing of Government contracts and the contracts of local authorities, to firms and companies who have adopted such a scheme. Clause 5 only provides for the machinery of the daily work of the Commission, and, further, that the Commission shall make an annual report, to be laid before Parliament, and that practically all that they do shall be subject to the approval of the Chancellor of the Exchequer.
It would be impossible now to place before the House any detailed argument in favour of co-partnership, but I should like to recall to the House that 10 years ago, on the 15th February, 1912 an Amendment to the King's Speech was I moved by the present Leader of the Opposition, and seconded by the right hon. Gentleman the Member for Platting (Mr. Clynes) in which they called attention to industrial unrest, and asked for the setting up of a minimum wage and the nationalisation of mines and railways. To that Amendment I moved an Amendment in very much the same sense as the provisions of this Bill, asking for the further adoption of the co-partnership principle and an equitable division of the profits of businesses between capital and
labour, setting out in detail what were the advantages. May I now just put before the House, in a few words, what I am convinced are the main advantages of co-partnership? It lessens strife and cheapens the cost of production of all commodities. It does that by lessening the burden of supervision, lessening the waste of material, and bringing the united brain of management and labour to bear upon the problems of production, and so improving the processes and their application to production. I am convinced that it, would increase our power to sell in foreign markets, that it would thus increase employment and give to wage-earners a human interest in life and in their work, and would raise their status to an absolute equality in every respect with every other class in the country. From this, as I hold, it would follow that it must increase the profits of industries throughout the country when they are equitably divided between all who work in those industries, and that, therefore, the revenue derivable from direct taxation would be increased. If any hon. Members think the inducement I offer of a rebate of one-fourth of the current rate of Income Tax is too much, I would remind them that an increase in profits to the extent of only one-third would result in three-fourths of the present Income Tax equalling the total which is now collected, and, therefore, I would ask for sympathetic consideration of these proposals by Members in all parties in the House, on the ground that I am asking permission to introduce a Bill which is an honest effort to contribute to industrial peace and the prosperity and welfare of the country. I beg to move,

Mr. A. HOPKINSON: I rise to oppose the Bill. While doing full justice to the admirable motives of the Mover, and of those who support it, I should like, from painful experience, to point to one or two dangers which are bound to arise if a Bill of this sort become law. In the first instance, the advantages to the workers to be obtained by co-partnership have, I am afraid, been very much exaggerated. After all, it is not desirable that the weekly wage-earner should invest his small savings in the same business concern from which he draws his wages. I have come up against that
problem myself already. If, through any mistake on my part, my business were to go down and become bankrupt, it is quite certain, if I had as co-partners those whom I employ for wages, they would not only lose their employment and weekly wages, but they would lose their savings as well. In fact, the danger has impressed me so much that I have come to the conclusion that the only proper way in which to invest such portions of their profits as they wish to invest yearly is to form some sort of investment trust, by which, owing to his greater knowledge of share markets and matters of that sort, the employer may be able to obtain for his employés a better return on their savings in safer investments than they can do for themselves.
This Bill puts forward a form of reform at the public expense, and it does not provide against one very great danger. It is perfectly easy for a producing or manufacturing company to sell the greater part of its output to an ad hoc selling company. Therefore, the advantage which would accrue from the reduced taxation owing to the co-partnership scheme would accrue really to the same individuals through the formation of a special selling company. It is a little complicated, because I do not know the exact wording of the Bill and what safeguards have been put in to prevent it. Under the working of the modern joint stock company system, it is possible to avoid making a large profit in a manufacturing company and to get a very large profit for the same individual by means of a selling company which takes over the output of that factory at low prices and retails it at high prices. Therefore, although, as I say, I recognise most fully the excellent motives behind this Bill, I hope that this House will not give it a Second Reading. It has not been thoroughly considered. It has evidently been drafted by people who have taken up with enthusiasm a new thing of which they had not had actual practical experience, and to my mind the dangers—and I hope the House will agree with me—are very much greater than the benefits which it can possibly give.

Question, "That leave be given to bring in a Bill to promote the more general adoption of co-partnership between capital and labour by statutory and other companies," put, and agreed to.

Bill ordered to be brought in by Mr. Peto, Colonel Sir Charles Burn, Sir John Butcher, Sir Evelyn Cecil, Mr. Flohler, Sir Herbert Nield, Sir Ernest Pollock, and Lieut.-Colonel Pownall.

CO-PARTNERSHIP BILL,

" to promote the more general adoption of co-partnership between capital and labour by statutory and other companies," presented accordingly, and read the First time; to be read a Second time upon Tuesday next, and to be printed. [Bill 92.]

FARM SERVANTS' HOLIDAY (SCOTLAND).

Mr. WESTWO0D: I beg to move,
 That leave be given to bring in a Bill to regulate the leisure time allowed to farm servants in Scotland; and for other purposes connected therewith.
This Bill, like the Measure which has just been presented to the House, is for the purpose of helping industrial peace, and I hope that it will meet with the same success. The object of the Bill is to make statutory a Saturday half holiday for the Scottish agricultural workers. Ample and adequate provision will be ma de for the feeding of livestock and for the suspension of the half holiday during seed and harvest time. As the result of organisation and of goodwill on the part of the employing community, we have been able to get the Saturday half holiday for Scottish agricultural workers in several districts of Scotland, and it has been found to be of immense advantage. Unfortunately, that voluntary effort has not been as successful as many of us wish. It has been unsuccessful in making the privilege universal throughout Scotland. At the present time, owing to the serious situation in which we find agriculture, many re-arrangements are taking place, and there is a tendency, even on the part of those employers who have goodwill towards their employés, to take advantage of the situation and take away some of those privileges that have been gined since 1914. The farmer who is not well-disposed towards his employés seeks to take an unfair advantage of the present industrial situation. The Bill would make uniform the granting of the Saturday half-holiday or its equivalent under guarantee by Statute to agricul
tural labourers, and there would be at least one half-day per week for recreative, social, and educational purposes. It would save the not too well-disposed employer from himself, and that is one of the purposes of good legislation, and it would protect the well-disposed farmer. I must say that in my own constituency I have a good many farmers who are well disposed towards their employés, and it would save them from the unfair competition of the not too well-disposed farmers. Agriculture to-day is in a deplorable state, wages are falling, and I suggest that the better industrial conditions we can give the better chance there will be of getting men to stop on the land and getting men to come back to the land. As the result of industrial effort, the farm workers have gained some privileges, and I am suggesting by this Bill that the House should guarantee some of those industrial conditions which they have been able to gain.
I am particularly interested in education—it may be because I got so little of it and because, consequently, I can estimate the value that it would have been to me if I had received it—and in a special way I am interested in agricultural education, being the convener of the Agricultural Education Committee for the county from which I come. I suggest that to make success in agricultural education doubly assured it is necessary that this Hill should not only receive approval on introduction, but should pass into law. All agricultural workers who are desirous of benefiting by the opportunities for education ought to have the advantage of getting that education, and they can only get it if there be uniformity so far as the half-day holiday is concerned. It would allow the education authorities to provide at the minimum expense the education necessary for adults in rural areas. It will be admitted that we require some education in the science of agriculture. We require to give every possible opportunity in our rural districts for the teaching and accepting of the teaching of the science of agriculture. We want to see these opportunities developed in such a way that they will benefit the agricultural labourer, and that can only be secured if we guarantee him a weekly half-holiday. I suggest that the farm labourer and his wife, owing to the monotony of their lives in connection with the industry and in the localities in which they live, ought
to have an opportunity once a week of visiting a village or township so that they can enjoy that social life for which common humanity craves in the rural districts just as much as in the big industrial areas. The younger generation of agricultural workers ought to be given an opportunity for recreation. It is the duty of everyone in this House so far as possible to make agriculture and the rural districts more attractive. This Bill takes only a very small step forward in that direction, but every step which can be taken ought to be taken to retain men on the land, and to attract to the land still larger numbers of our population. This Bill would preserve by legislation privileges which have been gained by industrial organisation, and in the interests of social life in the rural areas, and, above all, in the interests of education, I hope that the House will give me permission to bring in this Bill to legalise the Saturday half-holiday for the agricultural labourers of Scotland.

Question put, and agreed to.

Bill ordered to be brought in by Mr. Westwood, Mr. William Adamson, Mr. James Brown, Mr. Thomas Johnston, Mr. Robert Murray, Mr. Nichol, and Mr. William Watson.

FARM SERVANTS' HOLIDAY ( SCOTLAND) BILL,

" to regulate the, leisure time allowed to farm servants in Scotland; and for other purposes connected therewith," presented accordingly, and read the First time; to be read a Second time To-morrow, and to he printed. [Bill 93.]

LOCAL AUTHORITIES (EMERGENCY PROVISIONS) BILL.

Reported with Amendments from Standing Committee A.

Report to lie upon the Table, and to be printed.

Minutes of the Proceedings of the Standing Committee to be printed.

Bill, as amended (in, the Standing Committee), to be taken into consideration upon Monday next, and to be printed. [Bill 89.]

INTOXICATING LIQUORS (SALE TO PERSONS UNDER EIGHTEEN) BILL.

Reported with Amendments from Standing Committee C.

Report to lie upon the Table, and to be printed.

Minutes of the Proceedings of the Standing Committee to be printed.

Bill, as amended (in the Standing Committee), to be taken into consideration upon Thursday, and to be printed. [Bill 88.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE C.

Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had discharged the following Members from Standing Committee C: Sir Ryland Ad kins, Sir Henry Buckingham, Dr. Chap-pie, Mr. Mosley, and Mr. Charles Roberts; and had appointed in substitution: Captain Arthur Evans, Lieut.-Commander Kenworthy, Mr. Pringle, Mr. Cooper Rawson, and Mrs. Wintringham.

Sir SAMUEL ROBERTS further reported from the Committee; That they had added the following Member to Standing Committee C (in respect of the Bastardy Bill): Mr. Godfrey Locker-Lampson.

STANDING COMMITTEE A.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee A (added in respect of the Industrial Assurance Bill [Lords]): Mr. William Graham; and had appointed in substitution: Mr. Robinson.

STANDING COMMITTEE B.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee B (added in respect of the Salmon and Freshwater Fisheries Bill): Lieut.-Commander Kenworthy; and had appointed in substitution: Dr. Chapple.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee B (added in respect of the Special Constables Bill): Major Lloyd George; and had appointed in substitution: Mr. William Albert Jenkins.

Sir SAMUEL ROBERTS further reported from the Committee; That they had added
the following Member to Standing Committee B (in respect of the Salmon and Freshwater Fisheries Bill): Major Steel.

PRIVATE LEGISLATION PROCEDURE (SCOTLAND) ACT, 1899.

Sir SAMUEL ROBERTS further reported from the Committee That they had discharged the following Member from the Parliamentary Panel appointed in pursuance of The Private Legislation Procedure (Scotland) Act, 1899: Mr. Frederick Thomson.

Reports to lie upon the Table.

Orders of the Day — WAYS AND MEANS.

Considered in Committee [Progress, 16th April].

[Captain FITZROY in the Chair.]

Question again proposed,
 That it is expedient to amend the law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Fin ante.

Mr. ASQUITH: I am glad to be able to join, and join whole heartedly, in the congratulations that were offered last night to my right hon. Friend the Chancellor of the Exchequer, both upon the form and the substance of his Budget statement. I have, during the course of my Parliamentary life, heard, I suppose, more than 30 financial statements from various Ministers—I have contributed one or two myself—and, without making any invidious comparisons, I will say that my right hon. Friend, profiting perhaps by the bad examples of some of his predecessors, set a very good example to those who may follow him, not only in the lucidity and the completeness of his exposition, but in the avoidance of flights of rhetoric, and, what is still worse, the conventional jocosities which we are accustomed to associate with Budget night.
Before I say a few words by way of inquiry and criticism on the actual financial proposals which the right hon. Gentleman has brought before us, I should like to say something in regard to the results of the last completed financial year. There has never been, I think, so far as my memory goes at any rate, a case in which the Estimates produced on the authority of the Chancellor of the Exchequer have been so completely falsified both in the matter of revenue and of expenditure. The main charge which I and others made last year against the Budget of my right hon. Friend the Member for Hillhead (Sir R. Horne) was that, for the purpose of creating an ostensible surplus from which remissions of taxation could be made, he had suspended the operation of the Sinking Fund for the redemption of debt. Indeed, the statutory obligations under which Parliament stands to the creditors
of the country admittedly under his financial proposals could only have been met by borrowing. That I thought and still think to be unsound finance. But even so, even with the suspension of the permanent, regular provision for the redemption of debt, we had a further criticism to make, and that was that both in the matter of expenditure and revenue the right hon. Gentleman had taken too sanguine and optimistic a view. I ventured, I hope without any excess of the licence of Parliamentary language, to describe his Budget in that respect as a gamble, and I added—and perhaps he will remember these words—that if the gamble came off —no one would be more pleased than I myself. It did come off. But it is worth while from the point of view of sound finance to see how it came off.
In the matter of expenditure, the results are startling to a degree which I think has never been before realised in the history of the House of Commons. The actual expenditure—the amount issued to meet the expenditure of the year—is less than the estimate by nearly £100,000,000. The actual figures are, estimated, £904,000,000, issued, £812,000,000. I am very glad to congratulate most heartily the Departments and the Treasury on the attainment of such an unexpected and unprecedented achievement. It is most creditable to them. At the same time, I cannot help remarking that it seems to show that, at the time when the right hon. Gentleman produced his Budget, the actual expenditure of the country was swollen to a degree far beyond the national necessity, which has admitted of this enormous and unexampled curtailment in the course of 12 months. I do not find it quite easy to understand why, when the late Chancellor of the Exchequer introduced his Budget, and as late on as the time when the Finance Act of last year was passed—which I think was some time in June—he had no kind of prescience or even suspicion that this side of his accounts was to be so completely transformed, and indeed revolutionised. I do not complain of that. I am very glad to see that economies which many of us demanded years before have become capable of achievement.
I will refer to one other point only in that connection, that is Supplementary Estimates. I said—I am very glad that
what I prognosticated has turned out to be unfounded—I think it was the figure of £25,000,000 put into the Budget for Supplementary Estimates would be found inadequate. Happily it has not been so, but my apprehension was based not upon suspicion of my right hon. Friend's nefarious and concealed designs. It was based on experience. It was based on the fact that, during the three preceding years, since the War, in every year Supplementary Estimates have been found as the year went on not only to be exceeded but in some cases to be doubled in the programme presented by the Government. Therefore it was not an unnatural apprehension on my part to imagine that what had taken place in the past might be repeated in the future. I very gladly acknowledge that my apprehension there turned out to be unfounded.
A much more remarkable feature of our financial experience last year is the comparison between the Revenue as it was estimated and the Revenue as it was actually realised. It is quite true that if you take the totals, the estimate was £910,000,000 odd and the receipts were £914,000,000 odd. There was therefore an excess of about £3,000,000 in the realisation as compared with the Estimates. After telling my right hon. Friend I hoped the gamble would come off, I said those Estimates appeared to me to be based upon hope and upon conjecture. Let us look at them. He received under Customs and Excise £7,000,000 on balance more than he estimated; £10,000,000 more on Customs, and £3,000,000 less on Excise. I do not complain of that, because in these days it is very difficult to give an accurate estimate of one or the other. In Estate Duties again he received nearly £9,000,000 more than he had estimated. I do not complain of that, because the Death Duties, as every Chancellor of the Exchequer knows, are a most precarious, incalculable and fluctuating source of income. I think, however, that £9,000,000 is rather a large margin.
Then I come to three items in this account of receipts—Income Tax, Excess Profits Duty, and the heading of Miscellaneous, Special Receipts. The excess of the actual receipts from Income Tax over the Estimate is no less than
£50,000,000. How is that accounted for? I gathered from what the Chancellor of the Exchequer said last night, that there was on 31st March, a year ago, something like £120,000,000 of uncollected arrears of Income Tax. Is it not a fair question to ask why in budgeting for the receipts from Income Tax in the last financial year no adequate account was taken of that enormous amount of uncollected arrears? They have swollen the actual receipts by no less than £50,000,000. I should be very glad if the right hon. Gentleman will tell us what is the amount of uncollected arrears of Income Tax on 31st March of the present year, because when you get a miscalculation amounting to £50,000,000 last year, we must test the validity, or at least the probability, of the Estimate the Chancellor has made for the current year by having some kind of evidence whether a similar mistake is or is not going to be repeated. He gets a windfall in that way—whether it ought to have been foreseen or not I do not say—of £50,000,000.
Now I come to the next item. The right hon. Gentleman estimated that his receipts from Excess Profits Duty—£30,000,000 in the previous year—would be £27,800,000. What was the actual figure? £2,000,000. In other words, there is a discrepancy between the Estimate and the actual receipts of no less than £25,790,000. On one item, Income Tax, he got £50,000,000 more than he expected, and upon the other, which is much more remarkable, on a total Estimate of nearly £28,000,000 he only got £2,000,000. These things work in a mysterious way.
I now come to the third item, "Special Receipts" We know what that means. It is the old story of war assets. My right hon. Friend estimated for the receipt of £90,000,000. He got £51,000,000. There is a deficiency there of £39,000,000. Let us consider what would have happened if, with his uncollected arrears of Income Tax, which realised £50,000,000, his Budget Estimate of Execss Profits Duty and Special Receipts and new revenue had been realised. He would have got £63,000,000 more. In other words, the realised surplus from last year year would have been something very nearly £170,000,000. It may be said that these things cancel one another, £50,000,000 one way, £39,000,000 another way and £26,000,000 another way.
I do not know whether the Committee is familiar with a legend, which was current in my days in legal circles, of a celebrated criminal advocate who on his death-bed was reviewing his forensic career. First of all, the vision presented itself to him of the number of innocent people whose conviction he had secured. Following that there was the vision of the number of guilty people whose acquittal he had secured. He said to himself, in the last throes of consciousness, "Well, after all, they balance one another and, on the average, justice is done." That is the position in which my right hon. Friend finds himself to-day. Justice, indeed, I may say, more than justice has been done. Having budgeted for a surplus of £700,000 he has got no less than £3,000,000. Still, these things work out in a very mysterious way. From the point of view of sound national finance, the Chancellor of the Exchequer was wisely commenting last night on what he called close estimating. Well, I think these are record figures. I need hardly say that I am not referring to these matters in a controversial sense, because as I said to my right hon. Friend the Member for Hillhead a year ago, it is a gamble. His gamble has come off, and it has come off far more successfully than certainly I, or I think he, anticipated.
That accounts for the peculiar financial situation in which we find ourselves as regards the past. Now I should like to review, not in any hostile, nor even in a critical spirit, the situation for the present year and for the future as disclosed by the Chancellor of the Exchequer last night. First of all, I will take the question a debt, in regard to which his proposals I say at once seem to me to be sound. I will not go so far as to say that they are wholly adequate, but they are upon thoroughly sound lines. The provision which I understand my right hon. Friend makes for what was last night described in Table 7, "National Debt Service, Interest and Principal" for the current year, is £350,000,000, of which, I gather, £310,000,000 is interest and £40,000,000 principal. My right hon. Friend has made a great contribution to the clarity of the accounts by publishing Table 4, which shows the items of Debt maturing year by year, a valuable addition to the information of the House of Commons. If I am
right, of that £310,000,000, £33,000,000 represents what we repay to the United States in the current year.

The CHANCELLOR of the EXCHEQUER (Mr. Baldwin): The £40,000,000 includes the American Sinking Fund Account, while the amount for American interest comes from the £310,000,000.

Mr. ASQUITH: There is also the £6,000,000 on what is called the "silver loan," which disappears.

Mr. BALDWIN: Next year.

Mr. ASQUITH: That sounds a very large sum—£350,000,000—and it is a very large sum. But let the Committee recall to its recollection how we have dealt with this matter in the past. In the nine or ten years during which I and the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) were responsible for the finances of the country, from 1905 to 1914, we, on the average, set aside every year for the repayment of the principal of the debt at least £10,000,000 sterling. Taking the capital debt at that time—when he and I began to operate upon it it was between £700,000,000 and £500,000,000 —that amount of annual sinking fund for debt redemption was between 1 and 1¼ per cent.. We undertook very great financial obligations in regard to Naval expenditure, and still more in regard to social reform, Old Age Pensions, National Health Insurance and a number of other things; but we steadily set our minds to the inflexible purpose, from which we never deviated, of providing that large sinking fund for the redemption of debt, amounting to 1¼ per cent.
I was delighted to hear from my right hon. Friend yesterday that he is going to make it a matter of statutory obligation, so I understood him, that this year we shall set aside £40,000,000—of course we have now a number of compulsory sinking funds, but in the days when my right hon. Friend the Member for Carnarvon Boroughs and myself were responsible, we had practically none—and the Chancellor of the Exchequer is going to impose on his successors — the provision of £45,000,000 next year and, I think, £50,000,000 in the following year. These are very large sums, but we have
now a total debt of considerably over £7,000,000,000, ten times as much as it was in the time of my right hon. Friend the Member for Carnarvon Boroughs and myself. If you made your effort at debt redemption on the same lines or on anything like the same proportion that we did—I do not say you should; there is no question of party in this whatever; it is only a question of what is right economically in regard to the future of the nation, and I only want to bring out the facts—if you made it even at the rate of 1 per cent., that would amount to nearly £80,000,000, or more strictly, £77,000,000. I am not saying that you ought to do that this year, but you ought to work up to it. Speaking for myself and a great number of other people who do not belong to any party, and who look at the financial stability of the country, I do not think that we should be doing our duty in this matter of Debt redemption unless we work steadily up to some such figure as that.£50,000,000, I agree, is a great amount. If the right hon. Gentleman only had the power which Signor Mussolini would have to bind his successors, or to bind future Parliaments and to make this provision for Debt redemption secure against the depredation of financial adventures in the future, we should begin at £40,000,000, arrive in two years at £50,000,000, and then steadily advance up to the £70,000,000, I believe we could confer no greater boon on the financial stability of the country and the rehabilitating of trade, and incidentally and consequently on the world at large. I very greatly and gladly recognise the large advance which my right hon. Friend has made in that direction.
I do not propose to enter upon the large and more or less abstract question of the relative claims of debt reduction and tax remission. I must, however, say one word in regard to the speech of the Leader of the Opposition. I found myself completely at issue with him in what he said on that point. The Income Tax at 6s., 5s., 4s. 6d.—I go further, and say, even at 4s.—is, in my opinion, a bad and pernicious form of capital levy.

Mr. J. RAMSAY MacDONALD: Hear, hear!

Mr. ASQUITH: My hon. Friend agrees. It is a very welcome acknowledgment;
but, if so, I am afraid I rather misunderstood, or misinterpreted, his argument last night, because I thought the whole trend of his argument—indeed the whole purpose of it—was that a reduction of Income Tax, as compared with a larger reduction of Debt, was a mistake—that it would not go into the pockets of the people—

Mr. MacDONALD: Hear, hear!

Mr. ASQUITH: —that it would not tend to revitalise trade, and to recreate employment, and, in fact, to a large extent, would be a present on the part of the taxpayer to the better-to-do classes. That, I thought, was my hon. Friend's argument. I totally differ from him. It is quite true that the total number of persons assessed to and who pay Income Tax in this country at this moment is not more than, I suppose, about 2½ millions, but that does not in the least represent either the extent, the diffusion or the apportionment of the burden which an Income Tax at these figures imposes upon the trade of the country. The effect of such an Income Tax, which I have called, I hope without offence, a modified form of capital levy is not merely to curtail the enjoyments and comforts of a large number of our middle classes. Its effect is to dry up the stream which fertilises the whole field of employment and of industry. I should have thought that no class of the community is more directly interested in a reduction of the Income Tax to—I will not say the pre-War standard, for that is out of sight now, and an utter impossibility—but to a reasonable and moderate standard, than those people who gain their living by the work of their hands. It is not a class question at all. It affects the interests of the whole business world and the whole future of British trade. That is all I have to say in regard to my right hon. Friend's estimate of revenue, and his proposals for the reduction of taxation.
I said last. year, and I repeat now, that in this matter you ought not to look at the Budget of the present year alone, but you ought to look at the Budget of the next year, and not only of the next year, but of the years that are going to follow. It is not safe to take short views, and I am somewhat apprehensive—of course, I shall be told I am a discredited
prophet by some people—I am going to express some apprehension, which I hope may be falsified. I will assume for the purpose of the moment the argument that the Chancellor of the Exchequer receives in the course of this financial year the sums which he has estimated. He is dealing with a surplus, or, at any rate, a supposed surplus, of £30,000,000. He remits taxation to the extent of £34,000,000, which he admits in a full year will amount to £50,000,000.

Mr. BALDWIN: £47.000,000.

Mr. ASQUITH: Or something very near £50,000,000. My right hon. Friend, in his estimate of Revenue, has included, and I have no doubt quite properly included, Special Receipts of £40,000,000. What does he expect to get from that source next year? This is a wasting asset; in fact, it is almost extinct. Then again, what does he expect to get from Excess Profits Duty? I am speaking now of the year after this.
I should like to put another point which, I know, is very much exercising people in the City of London. The Floating Debt has been reduced, I am very glad to hear, in the course of last year by something like £200,000,000 in one way or another. That Floating Debt, which, I suppose, is still at £800,000,000, or something like, that, is represented for the most part by Treasury Bills, and at present the rate is very little, if at all, over 2 per cent. I am not prophesying again, but supposing—because it is a working hypothesis, and I am told that many of the best opinions in the City are in that direction—supposing the rate of money goes up. Supposing you cannot float your Treasury Bills at 2 per cent., or even 2½ per cent., or, perhaps, not even at 3 per cent.—It might be more. Has the right hon. Gentleman made provision either in his own Budget, or in his forecast of the obligations which will have to be met in the Budget next year, for the fact that there may be a very large increase, represented by millions, for the service of the Debt? I am not going to oppose the remission of Income Tax which my right hon. Friend has proposed, although I confess—I know it is a very unpopular thought—that if I had been budgeting for this year, doubt whether I should have given any remission of taxation at all. I am not going to raise that now, but all those
things have got to be considered when you are thinking of the position in which you are going to leave the country at the end of the year.
5.0 P.M.
I will add this. If remission of taxation is to take place at all, I think the remission of 6d. on Income Tax is perfectly justified, and I think it will produce very good results. I am much more doubtful, indeed, I am more than doubtful of the proposed reduction of the Beer Duty. I have no doubt whatever, that if you felt yourself in the position to make a reduction on indirect taxation, the commodity which ought to have been chosen was sugar. I heard what my right hon. Friend said last night about it being a speculative market, and so forth. That carried no conviction to my mind. At any rate, it is an experiment well worth trying. If you go to a working man's household, have you any doubt in the world which would be of more advantage to that household—a reduction of 1d. a pint on beer, or a substantial reduction in the duty on sugar'? It makes a vast difference. Sugar has brought down many Governments. So, for that matter, has beer. They are two great destructive agencies. But, on their merits, quite apart from the consideration of their voting efficacy, can anyone have any doubt that, if we could make a really effective reduction of the cost of sugar to the consumer, it would not only relieve the domestic anxieties of millions of our people but that it would set free for industrial purposes one of the great raw materials? I hope that, on further reflection, my right hon. Friend may see his way to transfer the relief which he proposed in the case of beer to sugar. We have raised this point and we shall press it and see what the opinion of the House of Commons about it.
I have kept the Committee longer than I meant to, but I have really endeavoured to raise points of substance. My controversy with my right hon. Friend the Member for Hillhead related to the past, but the important thing is what we are to do now and, still more, what is the prospect that faces us. My strong advice to the Committee is, not only to stick to but to develop and increase our annual provision for the redemption of Debt, to diminish stage by stage as quickly as we can the burden of the Income Tax on industry, and to achieve every year a re-
mission of indirect taxation on commodities like sugar which, from the point of view of trade and domestic and social life, is by far the most oppressive burden that now hangs over the shoulders of the poorer classes of the community. In conclusion, I would say that my hon. Friend has proceeded in this Budget on perfectly sound economic lines and I heartily congratulate him.

Sir ROBERT HORNE: I desire, in the first place, to join with all the previous speakers in congratulating my right hon. Friend upon the clearness and the lucidity with which he expounded to the Committee yesterday the present conditions and the future prospects of our national finance. It is not easy, in the course of a short speech, to render intelligible so complicated a subject, but I think we all agree that the statement of my right hon. Friend was a model of what a Budget statement should be, and I think we can assure him that he has earned both the admiration and gratitude of every Member of the House. The most interesting features of his speech were, of course, concerned with his proposals for the current year and particularly with the remissions of taxation he has seen it possible to grant. But, before I deal with these matters, perhaps I may be allowed for a moment to touch upon the past Budget. As the Chancellor of the Exchequer who was responsible for the Budget of 1922–23, probably some explanation from me is required, especially after the two speeches which have come from the front Opposition Bench. The Leader of the Opposition last night appeared to think that I must explain to the Committee the misfortune by which we have become saddled with a surplus this year. It is true I did not anticipate that surplus, but it is also true that nobody else anticipated it or at least to such a large amount. After all, it is a surplus, it is a considerable surplus; moreover, it is to be devoted to the very object which the Leader of the.Opposition last night asserted was the prime purpose of all our financial efforts, namely, the reduction of debt. Yet my hon. Friend is still miserable. There are people like that. I remember Mark Twain says of a particular individual, that he was happier when he was miserable than he was when he was happy without being miserable.
And apparently, for the moment, that is the role the Leader of the Opposition thinks it necessary to take in dealing with the Budget of last year.
My right hon. Friend the Member for Paisley (Mr. Asquith) complains against me that I under-estimated my revenue and over-estimated my expenditure. Well, that at least is not the offence with which I was charged on the Floor of this House a year ago. That year, as my right hon. Friend the Member for Paisley has candidly admitted, he attacked me because he then asserted that I was overestimating my revenue and under-estimating my expenditure. My crime, then, was that I was too much of an optimist, that I was too sanguine, that I took too rosy a view of the prospects of our finance. He then said on the proposals I was making for the reduction of taxes, that it was a gamble. But he did not call it a gamble then in the genial way in which he has done to-day. He attacked me then with a manner so austere that, for a moment, he made me feel I was outraging every moral principle which a discerning Providence had set up for the guidance of erring humanity. He was aided and abetted in that course by Sir Donald Maclean, whom we all regret not to have with us to-day. But probably the most lugubrious attack made on me was made by the hon. Member for Greenock (Sir G. Collins). He poured forth upon me a melancholy dirge of which the motif was "The gambler's road to ruin," and in respect that it was not my personal ruin he was predicting, he was unable to add a single cheerful note to his pibroch of impending disaster. All those prognostications, which those various speakers made with gloomy satisfaction, have been entirely falsified and we have got a surplus.
All I say about it, therefore, is that, if I was wrong in my estimates, there were others far more experienced, and by their own admission, far more competent, whose errors were egregiously greater than my own. It matters very little what personal errors I made in those estimates, for which, of course, I was responsible. The most important matter is how these miscalculations occur. We are entitled to come to a conclusion on that topic before we can adequately scrutinise the estimates of the current year. If you take the first among the items, the
revenue on Excess Profits Duty, I think a word of explanation would suffice to show how that occurred. It is true that only £2,000,000 was realised in the year, as against an estimate of something like £27,000,000, but there was collected in the shape of Excess Profits Duty £57,000,000, while £55,000,000 was claimed back successfully by people who had lost to an extent sufficient to enable them to get that amount returned. I ask any hon. Member of this Committee honestly to say whether he thinks there is anyone who could have made a good guess as to what a trader had been losing over the period in question?
Let me turn to one other matter, namely, the amount realised by the sale of war assets. I hope the Committee realises that these revenues are obtained by the sale of second-hand material. I should like to ask them to imagine the difficulties of the Treasury in dealing with an estimate, calculated in a market such as we had last year, of what was likely to be realised for the sale of second-hand material. Everything depended on the state of the market at the time. Everything depended on the state of production in the country at the same time. The most skilled men who could be obtained have been at the head of that Department, and the country owes them a great debt of gratitude for the labours they performed for the benefit of the State, most of them without any payment whatsoever. After discussing it with them, I made the best computation I could, but the Committee would realise the difficulty of arriving at an estimate on these matters if they only saw the varying tenders that had been made by astute traders for the commodities we had to sell. You will find just as wide variations in those tenders as you find in the estimates of the balance-sheet of the nation. I never thought it was possible to make anything more than a guess in connection with these two matters. I always thought, on the other hand—I say this quite frankly —that the estimate I had formed of the Income Tax for the year was on the low side, and I hoped that it would be enough, at least to make up for any miscalculation to which the other two items had been subject. In that connection, the story which the right hon. Gentleman told the Committee is not quite apposite. We cannot very readily exchange one person for another, but we can exchange one
pound note for another. When we come to a question of cancelling out, it is a very different thing dealing with persons from what it is when dealing with currency notes. But that is in passing.
I frankly confess that the Income Tax and Super-tax yielded a much larger revenue than I anticipated. The Committee will recollect that £50,000,000 of the revenue for the year is composed of arrears. The right hon. Gentleman asked how it was that a more accurate computation could not be made in connection with these arrears. Here is a simple explanation of the whole matter. I hope the Committee will not think that there is any egotism in this explanation, but so far as the payment of the arrears is concerned, I believe the whole solution is to be found in the fact that in the course of the year the Income Tax had been reduced from 6s. to 5s., and the taxpayer, the opportunity of obtaining relief, was naturally desirous of getting rid of all obligations under the old tax levy, and getting as rapidly as possible on to the level of the new tax. There is an old device, which I am sure is known to everybody in this House who has seen in operation the ordinary pump, by which, when a pump is not working, you put in a little water in order to create the necessary suction, and thereafter you get floods of water. The operation of the reduction of the Income Tax by was precisely similar in character. You put in the 1s. and there rolled out a stream of millions of shillings.
I turn from the amount of revenue for a moment to the question of expenditure, and I agree that the difference in the amount of the estimate and the realised figure is very great. It amounts to something like £97,000,000. But I hose. who were Members of the last House will recollect that, in the course of my Budget speech, I expressed dissatisfaction with the Estimates, and I gave my pledge to the House that whatever could be done I would do in order to reduce the actual expenditure. In fact, I spent the greater part of my vacation in completing this task, and I am glad to think that my right hon. Friend who succeeded me in office is carrying on the good work. It is due to that circumstance and to the fact that the Departments enthusiastically took up the effort which we had initiated, that you have got the great difference which is shown in our accounts to-day.
It would appear that if I had been less assiduous, I should have been less criticised. It is a good thing that virtue is its own reward. In politics it is apt to produce no other. Anyhow, I am quite unrepentant that I succeeded in getting the expenditure last year down by such a large sum.
One of the most striking items in the whole of the reductions is in the amount of the defence forces, naval, military and aerial. The actual expenditure was £28,000,000 less than the Estimate. More striking still, it was £14,000,000 less than the amount which the Geddes Committee had figured as being an appropriate amount for the cost of these Services. When all this has been disclosed, as now it has been, those who called so loudly for economy, but gave us so little help in the actual achievement of it in particular instances when they came before the House, should now honestly acknowledge that the last Government, and also the Government which has succeeded it, not only made great efforts in the cause of economy, but achieved great results. It is a rather curious circumstance that the difference between the estimates and the actual cost last year which, as my right hon. Friend says, was unprecedented, was very nearly approached by the figure of reduction in the year before. In the year 1921–22 the difference between estimated expenditure and actual cost was £81,000,000, which is not so far from the £97,000,000 of last year, but no notice was taken of it at all. I begin to wonder whether there was not a conspiracy on the part of my hon. Friends opposite to conceal from the electorate the great saving which we were effecting.
I turn to the proposals which the Chancellor has made for the current year. I am sorry to have delayed the Committee so long, but I am afraid it is necessary, in view of the criticism that has been levelled at me. For the current year the Chancellor expects a surplus of £36,000,000, after paying off Debt to the extent of £40,000,000, and he proposes certain remissions of taxation, with regard to which I would like to say a word or two in passing. I so strongly agree with every word which has been said by the right hon. Gentleman who preceded me in the debate with regard
to the merits of reductions in Income Tax in helping trade and commerce, that I shall not deal with that subject any further, in reply to what was stated last night by the hon. Member for Aberavon (Mr. Ramsay MacDonald), only that I would like to add that, if the hon. Gentleman wishes some evidence, even in a small way, of the truth of the theory to which the right hon. Member for Paisley has been addressing himself, he will find it in such simple things as these. He will find that the savings banks of the country have increased the amount of their deposits, whereas the withdrawals were exceeding the deposits in the previous period. He will find, also, that a larger amount of Savings Certificates has been taken up in the course of last year than was taken up in the previous year. Not only has the money which has been set free had the effect of making the capitalist adventure more and start more companies, which he, will see reflected in the returns for the Stamp Duties, but, as the right hon. Gentleman said, the effect of these things percolates down to the very lowest strata of society and helps the whole community.
There is one particular matter with which I have got to deal in this connection. Last night the hon. Member said, if I understood him correctly, that limited liability companies were hardly affected by changes in the Income Tax. I think that he must misunderstand the position entirely, if that is his point of view. The limited liability company pays Income Tax on the gross amount of profits, but for what is distributed to its shareholders it gets back the.tax from the Government. It therefore pays the whole tax on what it keeps. What it keeps is the reserve which goes into developments and new enterprises. What it keeps in times like these is the reserve which enables a company, as very many companies to my knowledge are doing to-day, to carry on its business and undertake contracts at a loss in the hope of a revival of trade. So far from the change in Income Tax being no good to limited liability companies, it affects them as acutely as many of the other enterprises that are carried on in this country.
I turn for a moment to the suggestion of a reduction in the duty on beer. No doubt my right hon. Friend the Chancellor of the Exchequer will please a
very large number of people in England by this reduction, but he has forgotten that north of the Tweed there is a people whose national drink is not beer. He has dealt with them even more harshly than he need have done, because, in dealing with table waters, the only reduction which he has given is on that class of table waters which you cannot mix with whisky. Accordingly, I am rather afraid that my right hon. Friend will hear from Scotland with regard to this matter before very long. But I would like to congratulate him on the fact that he has seen his way to make some remission on the Corporation Profits Tax. That tax, as he says, is unjust. In my view it is the worst tax on the Statute Book. I hale never concealed that, and I stated my view about it in the House last year. I should like, if I may be allowed to do so in a single sentence, to mention what its perversions are, or at least some of them. It is a second Income Tax upon a special class of people, namely, upon the ordinary shareholders of public companies. Some of my friends opposite seem to think that these are all wealthy people, for whom they need not take much concern, but if my hon. Friends go to look at the register of the big companies they will find that there are large numbers of shareholders among working-class people, many of whom are not income taxpayers at all. A further inequity of this tax is that, while it is a second Income Tax upon the people who usually pay it, in the case of the people who are not liable to Income Tax they can never get it hack when it is paid.

Captain WEDGWOOD BENN: Which Government perpetrated this tax?

Sir R. HORNE: It matters very little when you come to deal with a question of this kind, which is not a party question, which Government actually passed this particular tax. Perhaps my hon. and gallant Friend will remember that, when it was passed, there was very great need to increase the amount of revenue of the country, and it was at a time when everything was so prosperous that nobody seemed to suggest that it would cause any hardship. But now, when its operations are known, everybody who has studied the question, I am certain, will admit that it creates a great impediment, to industry, and at the present moment causes a tendency to drive to other
countries companies which otherwise would be here.

Mr. WALLHEAD: Is it not true that the Corporation Profits Tax was remitted to the railway companies?

HON. MEMBERS: That has nothing to do with it.

Mr. WALLHEAD: May I point out—

The CHAIRMAN: Two hon. Gentlemen cannot he on their feet at the same moment.

Sir R. HORNE: I am glad to answer the question. From the very beginning, all the railways, and the public utility companies, many of which are strictly limited in the amount of the dividends that they can pay, were excluded from they operation of the Corporation Profits Tax, and this was continued by the! Finance Act of last year. There is no sinister element in the matter at all. It was done from the beginning, from the institution of the Measure.
Let me turn to the other part of the Chancellor's proposals, in connection with the payment of Debt. I gathered that the Leader of the Opposition thinks that the Chancellor should have devoted all his surplus to the payment of Debt but none to the reduction of taxation. There are, of course, economists who would agree with that point of view, arid who, indeed, have been asserting it in many articles in the journals in the last few weeks. I confess that I have not been able to follow the arguments of that particular creed of pure theory on this matter. I am not sure that I entirely followed the argument of the right hon. Member for Paisley this afternoon. Of course, we are all in favour of paying off Debt, and everybody knows what its benefits are. But the proposition with regard to it is generally stated too broadly. In the Chancellor's speech yesterday I think it was stated too broadly. But happily, the Chancellor of the Exchequer's acts belie what be has said. If all is true which he said with regard to the advantages of paying off Debt, he ought to have used his whole surplus for it, because in that way he would, according to his own argument, have secured immensely greater benefits than by the reduction of taxation. But he did not do it. Why'? Because he knew that this country cannot bear its present rate of taxation, and that
remission of taxation is absolutely necessary if you are to have a prosperous and thriving community which will he able to yield an adequate revenue.
Taxation is a burden upon industry. When the burden on industry, as in the present condition of the world, is too great, industry cannot thrive, and if industry does not thrive your revenue disappears. Accordingly, the Chancellor of the Exchequer saw the necessity for giving the remission of taxation which was announced yesterday. I would not like to state the proposition as broadly as did my right hon. Friend. I would rather say that you should pay off all you can when you can. I agree with what was put forward by the Prime Minister from this bench in the Budget Debates of last year, when he said that when trade is good and thriving you ought to pay off every pound of debt that you are ale, but that when trade is bad you ought to slacken your efforts. Surely that is a far sounder theory than the belief that you can fix a- rigid amount which you will pay off every year, no matter how depressed your country is or what- effect the proposal will have on the taxpayer. The fallacy of all this seems to rest upon the idea that you can extract from the taxpayer a given amount of revenue, with no regard at all to whether it leaves him in a posit ion to carry on his business or not. I think that that is an entirely unsound theory, and that we can deal with these matters faithfully and properly only if we realise that in times of depression it is no good trying to extract too much from industry, that, to use the homely phrase, you are merely killing the goose which lays the golden egg.
You must realise that it is a question of circumstances. It is the same in business. Suppose you found a firm which was entirely solvent and had a certain amount of working capital to go on with, but that in order to pay off a portion of its debt, say, a debt demanded by a bank, it required to use up the whole of its working capital. Would it be a sane thing for that business to pay off its debt and to cease business, or would it be a wise- thing for the bank to insist on the payment of the debt? That is, perhaps, an extreme illustration, but it is not very remote from the point that we are considering. I give it for the purpose of showing that
you cannot urge any rigid rule on the subject and that you must act according to circumstances. You cannot simultaneously obtain golden eggs and paté de foie gras from the same goose, even if it is the taxpayer, and you must realise that with a little judicious care of the goose it will yield you a larger basket of eggs.
Why is it that we in this House to-day are all agreed that Germany should be granted a moratorium? It is simply this: Not that we mean that Germany shall escape her debts, but because we think that that is the way by which we will get most out of her in the future. I do not say that in the business of State finance you can apply principles in exactly the same way as in private business, but the principles I have been stating apply just as much to State finance as to the realm of private business. In dealing with these matters we should not endeavour to lay down any rigid rules. I venture to make this prediction: If the Chancellor of Exchequer next year finds the condition of things gloomier than to-day he anticipates, and if he sees that he really cannot provide his Sinking Fund of £45,000,000 without increasing taxation, he will raid his Sinking Fund before he will add a penny to the Income Tax. I hope the Committee will forgive me for expatiating at some length on these matters. To a certain extent I personally am involved in the criticisms upon this matter.
We are always adjured on such occasions to go back to the great precedents of the old Chancellors of Exchequer, and to see how magnificently they managed their business and with what a record of pure finance. I took the trouble the other day to look back on some of the things that were done on the foundation of our Sinking Fund. I found that Sir Henry Parnell, who in the earlier part of last century was a. great authority and expatiator on pure finance in connection with Government business, and was the Chairman of the Committee appointed for the purpose of arranging the Sinking Fund, wrote on this subject during the very year that the Sinking Fund suggested by him had been established It was in the early forties, as far as I can remember, or a little before that. He referred to the injurious effect of many of the taxes, and he went on to say:
 The public cannot derive any kind of advantage from reducing £800,000,000 of debt at the rate of £3,000,000 a year, which can be set against the certain good that will follow from the reducing of taxes to the amount of £3,000,000. There should, therefore, be no hesitation about suspending the Sinking Fund until funds could be got for it without doing so much injury to industry.
He clearly recognised that if you are diminishing your revenue by injuriously affecting industry, the necessary effect must be to suspend the Sinking Fund. Let me give a later example, in the person of Sir Stafford Northcote, who wrote a classic book on the subject of our Exchequer and Budgets. He set up the Now Sinking Fund in 1875, and I find that in his speech he said:
 I do not take either the extreme view of those who think that everything ought to be sacrificed to the diminution of the debt nor of those who represent it merely as a question of buying Consols at 92. I think we ought to make steady and continuous effort for the reduction of debt and that our efforts ought not to be partial and spasmodic. They ought to have regard to the general condition of the country and to taxation. If you are in a set of circumstances in which taxation bears very heavily upon the industry of the country no doubt it would he a great deal better to devote your energies to reducing, taxation instead of devoting them to the reduction, of debt.
I suggest that that is the rule which this House ought to follow instead of the more rigid rule which my right hon. Friend has laid before the Committee this afternoon. In the year 1855, when Benjamin Disraeli was Chancellor of the Exchequer, he was faced with the likelihood of a deficit. There was at that time in operation a Sinking Fund of £1500,000—not a large sum, but large in comparison with the Budget of that day. There also had to be met within the year £2,000,000 worth of Government Bonds which were maturing. Disraeli wanted to reduce the Income Tax from 7d. to 5d., and he suspended the Sinking Fund and proposed to meet the maturing debt by borrowing. There was exactly the same discussion in this House at that time as has taken place upon this topic, both last year and last night. What happened in the end was that the proposal was carried with the support of Mr. Gladstone. The result was not unlike the result in the Budget of last year. The Revenue came out much greater than was expected, and possibly for the same reasons—the
stimulus that the reduction had given. In the end, Disraeli did not require to borrow money to pay off the maturing debt, because he could pay it off with Exchequer bounties.
You can get precedents for everything no doubt, but these at least are precedents which this Committee would not be imprudent in following. It will be said, as was said last year, that if you do things of that kind you will injure the country's credit. I was told last year that the £1 sterling would depreciate in value as a consequence of what I proposed in the Budget. The £1 has steadily appreciated throughout the year. I was told also that Government Stocks would go down. Government Stocks have steadily gone up throughout the, year. The rise in the value of these Stocks is probably one of the reasons why the outturn of the Estate Duties has been much greater than was anticipated. We have, in point of fact; paid off a very large sum of debt in the last three years. We have paid off something like £450,000,000 sterling. I know it will be said, as against that, that we have been using capital assets which are represented by the stores of the Disposal Board; but the people who say that always forget that as against these capital assets we have been carrying many capital war debts. For example, we have paid off, over the last 2 years, out of revenue £60,000,000 sterling to the railway companies as one of the capital debts which we incurred during the War. We are now paying pensions out of revenue. There is a capital debt of the War, if there can be any. You have to keep these things in mind when you use that argument.
I say the Chancellor of the Exchequer is justified this year in reducing taxation to the fullest extent which he regards as possible. I am glad he has given these remissions. Personally, I think I should have gone further. I agree that in a year in which he has so much surplus as he anticipates, he ought to make some provision for Debt. I am quite sure about that, but I think he is making too great a provision in the circumstances of the case. I think he would have done enough had he met our contractual obligations under the various series of Government Bonds which provide for a Sinking Fund, and if he had, at the same time, found
the amount necessary to meet our debt obligations to America arising in the course of the current year. I believe that if he had done that, be would have been left with a balance of £10,000,000 sterling, and, for my part, looking to the interests of the country at large, and to the value to he derived from thriving trade and commerce I should have devoted that to wiping out the Corporation Profits Tax altogether, instead of only reducing it by half. It has been suggested sometimes that, if we do not make a rigid arrangement for the payment of Debt, by which we can statutorily tie our people, we shall be prone to forget our obligations, that we shall be shirking our duty and leaving it for our successors to undertake. I do not believe for a moment in that kind of prognostication. In my view, the attitude of this country since the Armistice has presented as great a spectacle of heroic performance as was exhibited even in the course of the War.
When hostilities ceased, all the excitement and fervour of patriotic emotion disappeared and our people had to return to the drab realities of the life which unfortunately awaited them. I ask you to think of this people in these circumstances. They were confronted with misfortune where they expected prosperity. They were faced with straitened circumstances where they had looked for fullness and plenty. They were met with vicissitude where they had anticipated comfort and happiness. Think of their patience in these circumstances and of the courage which they have shown amid al! the sufferings which they have had to endure' Think also of their steadfastness in maintaining the traditional ideals of this ordered country, when their distresses might very well have tempted them to follow false leads! No other nation in the world has shown the same endurance and serenity as this nation. None, not even the richest, has done so much to pay off its debts; none has been so faithful and honest in meeting the claims of its Government. For this people, for this generation, who have endured the horrors of war and are heroically and manfully grappling with the problems which have survived it, I think it is only fair to ask that the load which they have borne with so much fortitude should be lightened wherever it is possible.
In that way alone shall we revive a happy and cheerful spirit of enterprise in this land and create an adequate revenue for the discharge of the obligations of the State.

Mr. LEES SMITH: One very striking circumstance about this Debate up to the present moment is that it has been almost entirely confined to the one problem of the National Debt, and the methods by which it should be mot. We on these benches also concern ourselves with the problem of the National Debt and we have a solution which is fundamentally different from either of those proposed this afternoon—a solution to which I will come in a few moments. May I, before dealing with our own views, make some observations on the two speeches which have been delivered this afternoon. In one particular I find myself in agreement with the right hon. Gentleman the Member for the Hillhead Division of Glasgow (Sir R. Home). Like him, I was struck by the contrast between the very excellent and almost noble maxims with regard to the proper amount of debt reduction, laid clown by the Chancellor of the Exchequer, and the exceedingly meagre provision in that direction which the Budget actually contained. I admit that, compared with the principles of the right hon. Gentleman who has just resumed his seat, the Chancellor of the Exchequer has made a most excellent provision, but compared with any ordinary standard which can be adopted, that provision is quite inadequate. The standard usually mentioned in this House for some years past was a standard of £100,000,000. That was the standard which the right hon. Gentleman the Member for the Hillhead Division laid down himself in the Treasury Circular issued in 1921 calling for a reduction of expenditure in the Departments. It was the standard which a previous Chancellor of the Exchequer, the right hon. Gentleman the Member for West Birmingham (Mr. Austen Chamberlain) laid down two years ago when he said, with the general approval of the House, that £100,000,000 a year was by no means too much. I am quite willing to accept the standard laid down by the right hon. Gentleman the Member for Paisley (Mr. Asquith), a standard of 1 per cent. which, before the War, hon. Members opposite used to say was insufficient. That would give a sum of nearly £80,000,000, and the fact that the Chancellor of the Exchequer is pro-
viding barely enough to meet half that sum, justifies us in saying that, apart from our own proposal to which I shall come later, the amount laid down by the Chancellor of the Exchequer is insufficient, judged by any reasonable test.
I wish to comment on some observations which fell from the right hon. Gentlemen the Members for Paisley and the Hillhead Division. They both argued as if it were practically certain that, however insufficient the reduction of Debt, this year, somehow or another in years to come, in two, three or five years hence, the Chancellor of the Exchequer would be in a position so much easier that he would then be able to make a provision which would be generally regarded as satisfactory. That has been one of the main contentions of the right hon. Gentleman the Member for the Hillhead Division. Under present conditions and until quite a different remedy is adopted, what reason have we to suppose with such assurance that the position of the Chancellor of the Exchequer a few years hence is going to he any easier than it is to-day? One the one hand, undoubtedly, the charge for War pensions will be diminished, but, on the other hand, these War stores, without which up to the present not only would there have been no Debt reduction but without which the Budget would not even have balanced—these stores will no longer be available. Behind these two considerations is another of still more importance. It is quite clear that the position of the Chancellor of the Exchequer will be determined largely by the course of prices. I think I am right in saying that the general expert financial opinion is that, apart from temporary fluctuations, in a year or two the general course of prices is likely to be downwards. What will be the position of the Chancellor of the Exchequer then? That will mean the Revenue will diminish. It will mean, at the same time, that his expenditure will partly diminish hut, owing to the fact that half the expenditure is due to interest on the War debt, which is a fixed charge and which remains the same, however much prices may diminish, it is perfectly clear that the probability is a few years hence the Chancellor of the Exchequer will not, on the present basis of taxation, have even the surplus which he has to-day. He will not he able to pay off War debt even to the amount of this year, and that is one
of the reasons which brings us on these benches to the conclusion that there is no ultimate solution of this problem along any Sinking Fund lines.
May I take an argument which fell from the right hon. Member for Paisley. He contested the statement with regard to the reduction of the Income Tax which the Leader of the Opposition made last night. Our view is that under present conditions the reduction of the Income Tax not only is unjustified, but has been carried out along a line which is unfair, because it has been carried out on a system which gives most of the advantage to the wealthy class and gives little or nothing to the poorer Income Tax payers who are mostly in need of relief. As everybody knows, Income Tax payers are divided into two classes. There is the poorer section — three quarters of the total—who pay at the lower or 2s. 6d. rate. There is the wealthier one quarter who pay at the 5s. rate. By the right hon. Gentleman's proposals the poorer three-quarters are not going to have a reduction of 6d., but a reduction of 3d. whereas the right hon. Gentleman the Member for Paisley spoke as if they were going to have the benefit of the whole 6d. When the figures are worked out the effect is that of the £26,000,000 which the Chancellor of the Exchequer is distributing to the Income Tax payers, toy far the larger amount is going to the one quarter, who are the financial aristocracy at the top of the economic scale. Our view is that if you were going to carry out any reduction of Income Tax at all, the proper method of doing so would have been to increase the abatements for children, and possibly to raise the exemption limit, so that, with a fraction of the money which is being spent now, you could have concentrated your assistance on the poorer married men with family responsibilities and given your relief where the relief is most urgently required.
6.0 P.M.
May I come to the wider issues which are raised by this discussion? We are dealing with the problem of the Debt, and practically the whole of the discussion has been concerned with that problem. I think the Chancellor of the Exchequer will not dispute this, that there are only three possible methods of solving this problem. One is by the
method of converting the Debt to one bearing a lower rate of interest, to which he referred in his speech yesterday; another is the method of the Sinking Fund, which he is attempting to establish in his Budget at present; and the third is the method of the Capital Levy, about which a good deal will be heard upon the Floor of the House before this Session is at an end. Let me take the method of conversion, to which he yesterday devoted part of his speech, and I hope the right hon. Gentleman will give special attention to my remarks upon this subject., because I venture to say very seriously that his observations upon this question yesterday were most misleading, and that they require serious correction before they are repeated in this House. He said that, if you convert the rate of interest to a lower rate by even per cent., it would mean that on every £1,000,000,000 of the National Debt you would save £10,000,000 a year interest. That would lead us to assume that, on the nearly £8,000,000,000 of National Debt, you could, by the process of conversion, save nearly £80,000,000 a year.
First of all, I think the right hon. Gentleman ought to explain that of the National Debt of, say, £7,500,000,000, over £1,000,000,000 is debt to the United States of America, to which he knows that the process of conversion, owing to the arrangement, could not be applied. Another £1,000,000,000 is made up of a Funding Loan, Victory Bonds, and Conversion Loan, to which, again, conversion could not he applied of any kind which we need consider, because they are long-dated loans which do not fall in, I think, till past 1960. Another £1,000,000,000 or more consists of Treasury Bills and other short-dated securities, on which the rate of interest at this moment is only 2¼ per cent., and which is far more likely to be increased than to be diminished. I have gone into conversion with particular care, because, while I do not know what the experience of my hon. Friends around was in the Election, this was the only alternative which, in my constituency, my opponent had to put forward, and I therefore wish to follow it up. That means to say that out of the £7,500,000,000 of the National Debt, £3,500,000,000 comes within these categories to which conversion cannot in practice be applied.

Mr. A. M. SAMUEL: The hon. Member said we cannot convert the American Loan. That in terms is correct, but it is not quite correct in practice to say so. Does he omit to remember that if we raise, as the Chancellor of the Exchequer said, a loan in sterling at a less rate of interest and buy dollars with it, we should convert our external debt into internal debt and so reduce the rate of interest? He must not forget that.

Mr. LEES SMITH: If the hon. Member had waited, I was going to deal with that point. There are £4,000,000,000 left, and it is possible, on the very optimistic assumption that you can convert to a lower rate of interest by 1 per cent., to save £40,000,000 a year, but there is another factor here which, I venture to say, the Chancellor of the Exchequer entirely missed out of his calculations, and that is this, that if he does convert and in this way save £40,000,000 a year, then he will lose Income Tax and Super tax on that sum. He did not take that into his calculation, and that Would mean that he would have to deduct from that sum at least £10,000,000 a year, so that you are finally left with this, that this great alternative of conversion, even if it can be carried out, which he will recognise is a large assumption, leaves you with the possibility of saving £30,000,000 a year towards a National Debt whose interest is now £350,000,000 a year. I say that it is not a substantial contribution to the subject.
Now I come to the next alternative. Unless you are going to adopt the policy of a capital levy, there is only one other possibility, and that is to set up a great, massive Sinking Fund—not. to set up a Sinking Fund one year and to drop it the next, as has been done, but, having set it up, to carry it through, persistently and consistently, from generation to generation, in spite of all opposition. That is the only other method of dealing with the policy of the National Debt. The Budget which has just been presented confirms me when I say that I believe that to set up a Sinking Fund of sufficient size, and to carry it through relentlessly for generations, will he in practice an impossible operation for any series of Chancellors of the Exchequer. The fact is that your only alternative to our proposal is a Sinking Fund, and that no
nation in this world has ever yet wiped out its National Debt by means of a Sinking Fund.

Mr. WALLHEAD: We have not paid for Waterloo yet.

Mr. LEES SMITH: I am coming to that—and that this nation certainly has not done so. May I take the interjection made by my hon. Friend the Member for Merthyr Tydvil (Mr. Wallhead). In 1817, after the Napoleonic Wars, we were left with a National Debt of £850,000,000. We entered upon a period of unexampled economic and financial growth. We entered upon a period of extraordinary ease for the Chancellors of the Exchequer, when, as the right hon. Member for Hillhead has remarked, the problem of the Chancellor of the Exchequer was whether the Income Tax should be 2d. or 4d.

Mr. PRINGLE: It was abolished altogether.

Mr. LEES SMITH: There was the Sinking Fund in operation all the time, and yet in 1914 the National Debt was still £700,000,000. It had been reduced by only £150,000,000. I admit that part of this was due to new borrowing, due to the South African and Crimean Wars, but only about £200,000,000. Of the original Debt left in 1817, £500,000,000 was still unpaid in 1914. What does this mean? It means that, just as to-day we arc paying still for the Battle of Waterloo, so, if we continue to rely upon Sinking Funds, our descendants down the dim and distant ages will still be paying for Gallipoli and the Somme.

Sir R. HORNE: We are still enjoying the benefits of Waterloo.

Mr. LEES SMITH: That is no answer to my argument that the Sinking Fund is no alternative. What does all this lead to? I say that, if we are depending upon Sinking Funds, we are going to be left with an absolutely impossible situation. Hon. Members opposite ask for a reduction of taxation in order to prevent the decline of industry and the stagnation of trade, but what I ask is this: What can there be more certainly conducive to tin, stagnation of trade than this National Debt, by which all the working and active factors in the community have to pay this huge tribute every year, half the
national revenue, to a dividend-receiving class who give nothing in return, a class of rentiers who are not widely distributed in the community, because, in spite of the fact that there are a certain number of War Savings Certificates out, the final fact still remains—and figures prove it—that over 90 per cent. of the War Debt is held by one-tenth of the population. What can be more conducive to stagnation than the starving of all the social services which this National Debt entails, the starving of education, the starving of housing, the starving of all those forms of expenditure upon which not only the happiness, but the physical efficiency, of our population depend? I seriously believe that if this problem of the National Debt is not solved, we shall enter upon an industrial decline, and our people will suffer a degradation in their standard of life for generations to come. You cannot solve it by conversion. No country has ever solved it, and we will not solve it, by a Sinking Fund.
There is only one other method left, the method of the capital levy, and we on these benches say that the only method of dealing with the problem is to do it by one great, courageous effort, whilst the memories of the War are still fresh in the minds of the people, and as part of the sacrifices that the War has entailed if the capital levy does not solve the problem there is no solution for it: Our solution holds the field. This Budget shows that we were right when we challenged hon. Members opposite to produce any alternative to the capital levy. The problem cannot be solved in any other way. It is a problem which must be solved, and for that reason a capital levy is not only essential: it is inevitable.

Mr. HILTON YOUNG: I was reflecting while the hon. Member for Keighley (Mr. Lees Smith) was speaking that there was only one greater evil possible in connection with a national debt of undue size and that was to be unduly worried about it. True, the hon. Member presents us with an alternative. He says, "You cannot pay off your National Debt within our lifetime with a sinking fund: you must therefore, have a capital levy if you desire to pay it off." I offer a further alternative, that we should not be over-careful about paying it off too fast. The remedy of the hon. Member, by way of a capital levy, appears to me to be one out of all
proportion to the disease which it is intended to cure. It is, as it were, turning a flood into your garden in order to water your roses. It would do very much more harm than the evil he desires to cure. Let us not be over-terrified at the prospect of having a national debt not paid off in the time of our great grandchildren and which will still be a legacy of the Great War. It will do no great harm if it is reduced to reasonable dimensions; if the important point is not lost sight of: the process of this reduction being steadily continued. It appears to me to be one of those things that matter in finance, that the getting of debt paid off is comparatively immaterial in comparison with keeping the process going, because it is by the process of paying off the debt that you maintain your credit.
Let me pass to the actual practical considerations of this year's Budget. It it not my intention to deal with the past. Also it would be mere impertinence on my part to intervene in that field in which my right hon. Friend the Member for the Hillhead Division (Sir B. Horne) weilded to-day so powerful a blade. I enjoyed the reminiscences of those days of the great campaign of economy, when it was my privilege to be Sancho Panza to his Don Quixote. Facts, however, are very much more important. Accomplishments and actualities are more important than estimates and words and the memory of the Budget of last year, and great achievements for economy and the credit of the Empire in face of insuperable difficulties. These stand to the credit of my right hon. Friend. How great they are I think we can realise when we look at what comes after. The Chancellor's Budget of this year is the first occasion upon which, unfortunately, it has been impossible to budget for decreased expenditure in comparison with the actual expenditure of the preceding year. The figures are £816,000,000 for the current year in comparison with £812,000,000 realised expenditure for the preceding year. I refer to that figure as some evidence of how far the process of economy was carried in the course of the year which has now passed. I do not think for a moment that the process has been carried to its utmost limit, and that is one aspect of the present year's Budget upon which I want to dwell for a single moment. I refer to the circumstance of the Estimate for a
greater increase in the expenditure of the current year in comparison with the last. It seems to me evidence, and strong evidence, that the Chancellor's estimate for the coming year has been made on an ultra-conservative basis. I find evidence of that in his estimates of expenditure but I cannot but believe, with the experience of the processes of economising which the Treasury has, and which he himself has, and with the accumulated experience of machinery for economising that is so efficient, that he will be able to effect a very substantial reduction upon his actual estimates of expenditure as presented to the House.
I now turn to the other side of the accounts. I find again the strongest evidence that, as regards the actual Estimates for revenue, the Estimates of the right hon. Gentleman are also upon an ultra-conservative basis. Surely the lesson we ought to learn from last year's experience is not to over-estimate the effect in reducing the revenue of precisely those circumstances to what he has attached so much importance in his Estimates this year. I cannot but believe that as the months go on, on one side or the other he will find in his Budget an element of over-safety as regards the surplus at the end of the year. That is one aspect of the larger aspects of the Budget to which I want to give a little attention, and for a short while. Passing to the actual Estimates and the actual figures of the Budget as presented, I should like to drop a word about what has been said by the Chancellor on Supplementary Estimates. He has this year made no special provision for Supplementary Estimates, and that is promising. The words he used so succinctly upon the subject T am sure will he reechoed, so far as the sentiment goes, by everybody who heard them.
Supplementary Estimates are a canker in the year's finances. They are a very great evil which is by all means to be avoided. But a reservation must be made. With the enormous business that is being conducted by the Government through the Treasury and the spending Departments it is impossible to foresee every contingency. It is impossible to estimate with precise accuracy so far beforehand. Unforeseen contingencies do occur, and when they do occur they have
to be met somehow. If too absolute a rule be made against Supplementary Estimates, what will happen? The Departments will get into the habit of overestimating in order to have some concealed funds to use for unforeseen contingencies. I do not suggest that that has happened this year. The rule is too new against any provision for Supplementary Estimates to include results of that sort yet, but I would take this opportunity of calling the attention of the Committee to the fact that there is a worse evil than a reasonable provision for Supplementary Estimates. That worse evil is that the Departments should be allowed to get into the habit of over-estimating so as to have the funds i have mentioned
One final criticism on these matters. As regards the actual presentation of the Budget balance for this year, my right hon. Friend the Chancellor of the Exchequer has decided to commence but not to carry very far the abolition of the Corporation Profits Tax. I join my humble voice in the universal chorus of acclamation which has greeted the death sentence of that very inferior from of taxation. But I find in the actual manner in which the right hon. Gentleman proposes to set about the interment something to regret, for if the Committee will regard the circumstances of the departure of this duty they will find that while the Chancellor announces in the budgetting this year that the tax is to be halved with a. view, no doubt to its ultimate extinction, yet no actual reduction of the yield of that tax will take place in the course of the coming financial year. The proposal is thus put before the Committee as a financial vice for the right hon Gentleman is budgetting, not for this year, but for the year to follow this year. Proposals should only he made in connection with the Budget of the year: to do otherwise is to look too far ahead and to deal with contingencies and circumstances which you cannot foresee.
The Chancellor—and I put it in a very categorical manner—should deal only with the period for which he is working out the accounts. Let me then draw the moral of that and urge the Government, and the Chancellor, if they are going to abolish the Corporation Profits Tax to do it courageously and at ones. In conclusion there is one other circumstance to, which I want to allude, but this has been
dealt with by the right hon. Gentleman the ex-Chancellor. Another instance, still more conspicuous, of this financial vice is attempting to budget too far ahead. That has been dealt with with so much clearness and so much force by my right hon. Friend opposite (Sir R. Horne) that I will not enlarge upon id again, but I have to record the opinions strengthened by the experience of my right hon. Friend, that there is nothing gained by trying to fix the amount and the time of a sinking fund by statutory provision and the looking ahead for a period of years. It is the feeblest defence which you can build in defence of a. sinking fund. It has never yet withstood the shadow of the breath of passing need on the part of the Chancellor of the Exchequer. I would go so far as to say that the only effect of trying to holster up sinking funds by statutory provision is to give them a somewhat ridiculous appearance. You may, by this legal fortification, actually force upon the finances of the year financial measures which are absolutely unsuitable to you. We arc to some extent suffering from that at the present time. I maintain that it is a, very decided disadvantage presented to any Chancellor of the Exchequer that he is obliged to, fulfil to the letter all these statutory obligations undertaken towards our creditors in connection with the loans made during the Great War. Experience has clearly demonstrated that that was a mistaken policy, and I very much regret seeing the financial authority of this country surrounding our finances with fresh entanglements of this sort, which can do no good and must do harm. So much upon matters of minor importance.
A matter of major importance has forced itself upon the attention of the Committee which it is most necessary to consider, and that is the question of debt or taxes. In common with hon. Members of this Committee, I have felt a sense of dejection at the production of this year's Budget. Of course, I join in the most sincere congratulations to the Chancellor of the Exchequer for the admirable manner of his presentation of the Budget, because a Parliamentary treat of that kind is always a thing to be most thankful for. If I cannot join in congratulating the right hon. Gentleman upon the substance of the Budget as well as its form, that is a matter for regret. What is this
sense of dejection due to It is due to the sense that this year we are confronted with a very special occasion in the financial history of the country.
I think it is clear that we have passed from the close of one well-marked period, and are now passing to the close of another. There was the transition from the war period to the abnormal post-war period, and that is past. What is present with us now is the transition from the abnormal post-war period to the period of the ordinary world as it is going to be for the rest of our lifetime. Apart from miracles, we are passing into the ordinary state of affairs. At that transition point there is a turning to take, and it. is this: The country can turn in the direction of enterprise, initiative, and the struggle upwards back to prosperity and away from unemployment, and it can—and it is only too likely if things do not take the right turn—settle down into the habit of depression to accept unemployment, depressed trade and adversity as if it were the normal state of the world after the Great War. That is the danger, and in order to remove the danger of settling down into the habit of depression it needs a stimulus, and I believe that stimulus can be given, or at any rate can be contributed to by the management of the national finances.
I find no such stimulus and the necessity for no such stimulus appreciated by this Budget. We have taken £40,000,000 for debt this year, and £100,000,000 last year, but this burden is too heavy for us to bear at this time. I do not think there is anything irreconcilable in the view of the right hon. Gentleman the Member for Paisley (Mr. Asquith) and that of the right hon. Gentleman (Sir It. Horne) the late Chancellor of the Exchequer. There is nothing irreconcilable in the two principles which they have laid down. We are all in favour of the urgent prosecution of the principle of debt redemption at and when the time comes to do it. I myself certainly acclaim as by no means more than adequate the provision for debt sketched out by the right hon. Gentleman the Member for Paisley, but do not let us be too much hypnotised by what we have learned to regard as the habits of finance. A cold bath may be a good thing when you are in a good state of health, but it may not always be suitable when you are in ill-
health. This principle of debt redemption may be suitable when industries are enjoying normal prosperity, while to apply the same principle at a time like this may be fatal or at any rate very injurious.
The redemption of debt is not an end in itself; it is only a means to an end, and the end to which it is a means is the improvement of national credit. There are economies which follow improved credit. There are such things as the exchange, interest on your debt, cheaper money, and so on. Those are the ends of debt redemption summed up in the two words "national credit" National credit can be injured by other things than by failure to redeem debt. It can be injured by over-taxation, and that is a point which has been developed by the late Chancellor of the Exchequer. I will only take this point upon it, and the argument is well known. You must have ample provision in the economy of the country for funds for reinvestment in industry. When such a point as I have stated is taken, that in order to do so you must reduce taxation, the argument is put against it that there are ample funds available for investment in industries. I think this is entirely based upon the too exclusive regard for the habits and practices of big industries. Because there is plenty of money available for big industries it does not follow that there is plenty of money available for the industries of the country as a whole.
There is something which is of more importance to the country than the big industries, and it is all that vast range of smaller industries such as the one-man industry, and the man running his own shop. That is the real foundation upon which industry is built. It is for those reasons that overtaxation is starving industrial enterprise and production. As a rule those connected with the small industries do not borrow. If they can make good savings out of their profits they put it back again into their trade and go ahead in that way. If that money is taken in taxes these men sit down and wait for better times. These people do not borrow. I think it is clear that at the present time for this year, and possibly for the next year, it is in the interests of national credit and of the whole financial interests of this country that you should increase to the utmost limit your provision for the reduction of taxes, and
you should not be overcareful for a year or two about your provision for debt redemption. I will go a step further than that. I would even maintain that the circumstances which led to the placing of £100,000,000 out of the taxpayers' pocket last year to the redemption of debt was thoroughly bad finance.
It was an accident. As soon as it became obvious that that accident would occur I believe it would have been wiser to have taken measures of foresight and have investigated, possibly with the assistance of this House, as to whether more useful employment could not be found for a part of that sum. The country is now bearing a Sisyphus load of debt. It was a disastrous thing we had to do last year to reduce debt to the extent of £100,000,000. We may be told that it is too late now to consider the destination of the £100,000,000 for last year. I do not know what the destination of that £100,000,000 has been, but I imagine most of it has been used in order to meet Treasury Hills. If this was the manner of the employment of this money it would be very easy to allow those Bills to run on again.
It may be asked to what, in accordance with this theory, can you devote these funds? Are they not to be devoted to that object which we have all been describing as the object the Government should serve at the present time, that is, the giving of an impetus to industry. Governments can do it, and it has been done. Development work on new capital works is precisely that sort of work which can he developed and stimulated by the Government. Is there not work for the development of capital resources, of capital means of production that is clamouring for assistance in the further parts of the Empire. It is well known that there is ample scope for work precisely of that sort which may be encouraged with a little Government impetus to get it started. How easy that would be. The Chancellor of the Exchequer would not have to borrow the money again, because he: has machinery under the Trade Facilities Act ready to his hands by which, under a system of guarantee, no actual cash is required in order to increase the assistance to development work. All that is required is for the Chancellor of the Exchequer to make up his mind, and for this House to make, up its mind, to increase from £50,000,000 to £100,000.000
the limit of the loans which the Treasury is authorised to guarantee for trade facilities and development. Probably no cash would be required.
From this one might draw a practical moral, and it is the knowledge that these funds were there needlessly devoted to the redemption of debt last year, should encourage the Government to adopt a larger scheme of trade facilities by enlarging the amount which the Treasury can guarantee for the assistance of development work more especially overseas. Promises of economy are all very well. I would point out that some work has been done for that cause by some of us in the past, but economy is but a means to an end. The end to which it is the means is the recovery of the prosperity of the nations. Besides actually effecting the economies, when you have done so you must be prepared to make use of the fresh resources and the fresh power which you gain in order to advance development, increase production, and to stimulate the nation to fresh efforts. That is so with regard to the machinery of taxation. That is so as regards the use of what you have gained by economies in expenditure. It is no good to sit back when you have got the expenditure down and have reduced taxation. You must then proceed to advance the means by which the schemes of development which the Government actually administer can be advanced so as to give that impetus which trade requires.

Sir LAMING WORTHINGTONEVANS: I wish to deal for a moment or two with the Sinking Fund, and what should be done in regard to it, and I also wish to deal with the point with which my right hon. Friend the Member for Norwich (Mr. Hilton Young) has just dealt, namely, the application of last year's surplus. May I, before I do that, add to the chorus of praise which has greeted the Chancellor of the Exchequer's speech? On few occasions have there been clearer speeches on so difficult and complicated a matter. Before I deal with the actual Sinking Fund that is now in operation, and the proposals of the Chancellor of the Exchequer, let us remind ourselves of what the debt and the capital liabilities of the country are. There is, as is shown in the Blue Paper which was circulated yesterday, an aggregate of £7,773,000,000 of National Debt in one
form or another; but, in addition to that, there are other liabilities which are not capitalised, and which do not appear in the Blue Paper. There is, for example, the liability on War pensions. The capital value of that liability is probably—I have not the actuarial figure—between £900,000,000 and £1,000,000,000. It calls at the present moment for an annual expenditure of £73,000,000, but in that £73,000,000 there is a very large Sinking Fund, or, at least, there is a payment annually made which goes to reduce the capital liability on pensions account. That is variously estimated, but it cannot be estimated at less than £30,000,000 a year. There is another liability in regard to the past housing programme. I am not speaking of the liabilities which will be incurred under the new Bill which has just been introduced, but of the old housing programme. There is a liability on that account of £10,000,000 a year, or thereabouts, for 60 years, that is to say, the State has guaranteed the municipalities and local authorities against loss in excess of the proceeds of the penny rate, and it is estimated that that will cost the State £10,000,000 a year for the next 60 years. If that be capitalised, it cannot be capitalised at less than about £120,000,000.
When, therefore, we come to consider what the nation's liabilities are, and what sinking fund should be applied, we have to take into account, not merely the £7,793,000,000 of actual debt, but also the capitalised value of the annual payments for which we are now already liable. The Chancellor of the Exchequer proposes to create a sinking fund in the future of £40,000,000, rising to £50,000,000, a year, but that is not, I submit, the only sinking fund which will be in operation. There will be the annual payment of at least £30,000,000 on War pensions account, which goes to liquidate the capital liability there, and there will be, on the housing programme, another £4,000,000 over and above interest which goes to liquidate the capital liability on housing. The actual proposal, therefore, for the future is not merely what I may call the Baldwin Sinking Fund of £40,000.000, rising to £50,000,000, hut it is, in addition, another £34,000,000 a year; and so, in fact, we have at least the amount that, the right hon. Gentleman the Member for Paisley
(Mr. Asquith) considered to be the ultimate object at which we should aim, namely, as he put it, £70,000,000. We shall have next year £74,000,000, rising during the next two or three years to £84,000,000. That, I might remind the Committee, will be about 10 per cent. of the revenue; we shall be using about 10 per cent. of the revenue of the country in liquidating capital liabilities; and it is equal also to about 1 per cent. of the outstanding capital.
That, in my judgment, is too much. I should not be willing to capitalise pensions and drop the Sinking Fund, but to put them both into operation together is, in my judgment, asking the present taxpayer to carry an undue burden, because, as my right hon. Friend the Member for Norwich so clearly put it in his very able speech, a sinking fund is only a means to an end, and the end is national credit. Can we reduce that £84,000,000 a year of tax upon our annual revenue without interfering with national credit? If we can, I entirely agree with my right hon. Friend that we ought to do so, and to do so at once, because, as is well known, taxation is a hindrance to all industry, and especially to the, small industries with which my right hon. Friend was dealing It specially hurts the man who is almost a beginner, the first spring of industry, and it is very necessary to relieve him if it is at, all possible. I believe it can be done, and I think the Government ought to consider very seriously whether so much need go to the Baldwin Sinking Fund.
I now want to deal with the other subject, namely, the surplus of last year. The hon. Member for Aberavon (Mr. Mamsay MacDonald), who leads the Opposition—I am sorry he is not in his place—last night caught me as I was going out of the Chamber, and suggested that, from a letter I had written to the "Times," I thought that that surplus was in gold at the bank, and could, therefore, be brought out for the purposes of the housing problem. I am sorry that he had that opinion of me. I am sorry he thought I was so foolish. I knew that it was not in gold at the bank, but let, me remind the Committee where it is. It has, as my right hon. Friend the Member for Norwich said, simply been used, either to reduce Ways and Means advances, or to let Treasury Bills
run off and not renew them. As far, however, as the House of Commons is concerned, I believe the House expects that under the Finance Act, 1920, when taxes and other receipts come in and are more than sufficient for the moment, then that class of Floating Debt is reduced, or, rather, is not renewed. That provision in the Finance Act, 1920, was intended to prevent idle balances from being piled up in the Exchequer, and the loss of interest by reason of payment of interest on out standing debt when cash was in the exchequer. I do not believe it was intended for any other purpose. The Chancellor of Exchequer yesterday dealt with that point, and I am going to read what he said, because I think there is some confusion, and I am certain that it was not understood. After dealing first of all with the old Sinking Fund, and then saying that a change had been made in the Finance Act, 1920, he said:
The effect of this procedure is that the Treasury can apply its surplus receipts forthwith to a reduction of debt without keeping them idle in the Exchequer."—[OFFICIAL REPORT, 16th April, 1923; col. 1727, Vol. 162.]
I am sure, however, that the Chancellor will not say that, because that process has been gone through, the House of Commons has lost control over the money. It is not, perhaps, a fair question to put to him and expect an answer, but I venture to assert that that money is still subject to Parliamentary control, that nothing that has ever happened has taken away from the control of Parliament the actual disposal of that money. There is a very curious point in connection with this. It is a very technical point, and I do not know whether public attention has ever been called to it, but I am going to call attention to it. I can do so very briefly, although it is rather difficult to follow. Under the Act of 1875, the old Sinking Fund was set up, and there was a direction that the Comptroller and Auditor-General should, at the end of every financial year, within 15 days, make up an account showing what surplus, if any, there was of revenue over expenditure on revenue account, that he should certify what that surplus was, and that then, within the next six months—and that is rather material—the Treasury were, subject to any previous decision of the House of Commons, to apply that
surplus in reduction of debt. The clear object and intention there was that there should be an account showing what the surplus was, that the world should know what that surplus was, that the House of Commons was to have the opportunity, if it chose, of dealing with it, and that if it failed to do so, then the Treasury was to use it for the redemption of debt.
That was the original history of the matter. It. was altered in 1920 by the Finance Act of that year, for the reason, to which the Chancellor referred in his statement, that it would be highly inconvenient, and, indeed, really impossible, to maintain a large surplus like £100,000,000 in Exchequer balances, and keep it there until the end of the year. That inconvenience, or even impossibility, being before the Government of the day, in 1920 a Clause was added to the Finance Bill which made this provision—not, as the Chancellor of the Exchequer said, to enable the Treasury to apply surpluses as they accrued in reduction of debt, but that any money used out of revenue for the purchase or redemption of debt during a year should be "deemed to be "—those are the exact words—expenditure of the year and in the account in the Blue Paper this £101,000,000 is treated as expenditure of last year. That cheats the old Sinking Fund of everything; it destroys the old Sinking Fund altogether, because it is deemed to be expenditure of the year, and, therefore, there is no surplus of income over expenditure on revenue account during that year. The position is an absurd one. The House of Commons never intended to do that. What the House intended to do was exactly what the Chancellor of the Exchequer said yesterday, namely, that the Treasury should he allowed, in the interim, to use surplus receipts for the purpose of paying off current debt, in order not to lose interest. What has happened has been quite different, and at some time or other the House ought to consider whether it has not unwittingly parted with one of the protections of the old Sinking Fund. Apart altogether, however, from technicalities, and that is a technicality, although rather an interesting one, the House has to make up its mind what it is going to do with the £101,000,000 of surplus last year.
7.0 P.M.
If, technically, that no longer exists, because it is not even in the old Sinking
Fund, then the Committee will have to make up its mind what it is going to do with the equivalent of the old Sinking Fund. The right is not taken away, that is clear; and the right hon. Member for West Swansea (Sir A. Mond) last night gave several precedents in which the House had exercised the right to deal with the surplus. I will add two more. Sir Michael Hicks Beach, in 1896, passed a Naval Works Act, which took away the surplus of the year 1896. In the following year, he passed the Military Works Act, of 1897, in which he absorbed the surplus of £2,500,000—a very large surplus in those days—for the construction of military works. I suggest that we ought to do the same thing, not necessarily with the whole £101,000,000; hut that part of it should be used, at any rate, for capital expenditure on other works, namely, on the housing of the people, which is one of the most urgent requirements of to-day. Sir William Harcourt did not do exactly the same thing, but he justified having borrowed, on capital account, expenditure which might have been met out of revenue, by saying that he had a surplus at the end of the year equivalent to the amount that he had borrowed on capital account. So that., if we do this thing, we have got good precedent on our side, and some of the best known Chancellors of the past have acted in the way that I am suggesting.
May I put to the Committee why some of it should be used on housing account, because that is a liability incurred during the very year when this surplus was rolling up. If our accounts were kept as the accounts of business firms are kept, those sort of liabilities would be included in the accounts. Our accounts are kept on a purely cash basis —the cash received on one side and the cash paid out on the other —and the balance between the two is the surplus. In addition to these cash payments and liabilities, however, there is this liability for housing. If it were inserted in the account it would be seen, I very much doubt, whether there would have been a surplus at all, because the liability of the State of £10,000,000 a year for 60 years cannot be capitalised at under £120,000,000. We are being invited—of course, I cannot discuss the new Housing
Bill to-day, and I do not want to discuss it—to launch out on a new housing programme, and we all know it is very necessary. I suggest to the Committee that before they do that they should, so far as possible, clear the decks of the old liabilities. The old liabilities rest upon the State, and until they are discharged by the State, the local authorities are more or less hampered in the borrowing that will be necessary for the new programme.
I will give an example. I have had a great many examples sent to me from all over the country during the last few weeks. One local authority has had to borrow for the old housing programme. It has borrowed £28,000 at 6 per cent., £23,000 at 6 per cent., and under £3,000 at 6½ per cent. The State has guaranteed that local authority—as it has guaranteed all other local authorities—against loss beyond the proceeds of a penny rate. The penny rate produces £700 a year. The loss on that programme is going to amount to at least £4,000 a year; the State has got to pay that £4,000 a year; and that loss is increased because of the borrowings at 6 and a per cent. What I suggest is that part of the Sinking Fund of last year should be applied in settling that liability. See how it would work. Supposing only one-half of that liability were settled—£2,000 out of £4,000—you would be paying from the State to that local authority, say, £25,000 in cancellation of that £2,000 a year liability. That local authority would have £25,000 in hand with which to start a new programme, and it would probably then not have to borrow at the ruinous rate of 6 and 6½ per cent. That is reducing debt. That is the object of the Sinking Fund. That is what the Sinking Fund is for. There is nothing in principle which prevents the Chancellor of the Exchequer accepting the suggestion that I make to him, that he should use a part of last year's surplus for the purpose of setting going the new housing programme.
See what it entails. I f you are going to have 200,000 new houses, it will cast you £30,000.000 in capital, at the rate of about £150 a house subsidy. That is, I believe, what the Bill contemplates. So far as the Government—the State—is concerned, it contributes £6 a year, £75 capitalised, and another £75 added to it by the local authority, making in all £150
per house. £150 per house for 200,000 houses is £30,000,000. You cannot do better with your Old Sinking Fund than set up, at least, a fund of £30,000,000, so that the new housing programme may start without being handicapped by extravagant interest charges, and they are extravagant. Although money is cheaper, you have to remember that the local authorities have borrowed a very large sum, and one wells knows that as you go on borrowing it is very much more difficult to get lenders, and you will very likely have to pay higher rather than lower rates of interest. It is perfectly true that money is cheaper, hut there comes a time when a local authority cannot borrow any more, and still the houses may not be there. Before we part with this Sinking Fund, and while we still have an opportunity of dealing with it, I suggest that we should put it, at least partly, towards the housing programme. I quite agree with my hon. and gallant Friend that part of it should be devoted to encouraging trade, because, as he so well put it, the object of the Sinking Fund is to maintain the national credit. So long as you do not reduce the national credit you are, in fact, doing the best for the nation if you use the Sinking Fund in promoting work, or in financial measures which are likely to cause increased employment.

Mr. WILLIAM GRAHAM: The range of subjects which is opened up by any Budget Debate is so wide that we have to confine ourselves to discussing one or two. I propose, to-night, to select a few of the subjects which more especially appeal to us, on these benches. In the course of the Debate last night, my hon. Friend the Member for Ilford (Mr. Wise) referred to the much-discussed problem of the balance of direct and indirect taxation. He went back to the time before the War, in which it used to be a working principle, in this country that we tried to raise about 50 per cent, of our total annual revenue from direct taxes on the one hand, and about 50 per cent. from indirect taxes on the other. As a statement of fact I do not propose to quarrel with the point which the hon. Member made. At other times, as he quite clearly indicated, it was not anything like 50 per cent. in each case. It varied, from time to time, and in recent years there has been a marked change in the direction of
raising more money from direct taxation and less from indirect taxation. The position, according to the Budget statement last year, was this, that we raised about 64 per cent. of our total revenue from direct taxation, and about 36 per cent. from indirect taxation. May I make it perfectly clear to-night that we, on these benches, notwithstanding that change, which has arisen very largely from war experience, will continue to press, with all our power and conviction, for a further reduction of the yield from indirect taxation.
May I say to the Chancellor of the Exchequer, that the policy which I think we should pursue in this country at the present time is, so far as possible, to reduce taxation on articles which can quite clearly be called the necessaries of life. I should give a preference in the remission of all indirect taxation to such commodities. In the second place, I should take the articles which were among the comforts—which arc sometimes called the conventional necessaries—and, so far as possible, consistent with the general structure of finance, give concessions under that head as well. In any case, looking to current social conditions in this country, it is plainly our duty to do the very best we can for what, undoubtedly are necessaries in the every-day life of the people. Judged by that test, this Budget is a very serious disappointment. There is no remission on sugar or on tea, but there is a concession on beer, and a small concession on aerated waters. I do not think any student of this problem, at the present clay, can seriously suggest that, important as these reductions may be—in my judgment, the Aerated Waters Duty should be altogether abolished—they can compare for a moment with the importance of further reductions on articles upon which the people urgently and immediately depend.
I would press that consideration very strongly, from any point of view. We can never frame our Budget, and allocate the taxation of any year, without looking to the kind of social foundation on which we are going to impose it. These are times of very serious distress. There has been a decline of many hundreds of millions of pounds annually in the aggregate wages paid to 7,000,000 or 10,000,000 of the British people. There are very nearly 1,300,000 people still without employment at all. In conditions of that kind it is
supremely important that we should make cur contribution from the standpoint of taxation to the lowest range of prices on these commodities, and it is on that head that this Budget is very weak indeed.
I want to pass to a question which is of perhaps greater and in some respects more urgent importance for the immediate purposes of this Debate. After a great deal of pressure in this House and a Considerable amount of pressure behind the scenes the Chancellor of the Exchequer has agreed to introduce certain proposals to deal with the evasion of Income Tax, and I want to remind the Committee of certain important facts in that connection. The Royal Commission on Income Tax in 1919 very carefully reviewed the whole problem. They came to the conclusion, on the evidence which was submitted to them, that a considerable amount of evasion was taking place. and many others who served on that Commission have never exaggerated the amount of evasion in any way, but the Association of Income Tax Surveyors themselves stated in evidence that over a period of a few years before the Royal Commission sat there had been a loss to the Exchequer of not less than £100,000,000, by evasion I quite agree not only of Income Tax but also of Super-tax and Excess Profits Duty. Other witnesses stated definitely that the loss by evasion of Income Tax was anything between £5,000,000 and £10,000,000 per annum, and on the very lowest estimate, according to cautious witnesses before that tribunal, we were losing anything up to £10,000,000 a year by this form of evasion. It is one of the regrettable facts of the present proposals that they incorporate only one or two recommendations which were made by the Royal Commission, and they are not the most important recommendations by a long way.
The Chancellor of the Exchequer proposes to introduce certain changes in the time limit of the assessments, in the period of repayment, and also in considering claims and rebates and one or two problems of that kind. The proposals which he makes are only three or four out of twelve or fifteen, applying not only to Income Tax, but also to Super-tax which were unanimously recommended by the Royal Commission, because that is one part of their Re-port on which
there was no division of opinion at all They recommended that there should be access to books, that in certain circumstances banks should be required to furnish information, and that accountants should he called upon when required to state the nature of their audit. Another recommendation was that there should be made more accurately a valuation of stocks, but the central and the leading recommendation was undoubtedly the power of access of the assessing authorities to books, documents and vouchers which they do not possess or which they can only exercise with very great difficulty at present. On that point a witness whose evidence was put in in writing drew attention to the very important fact that when access to books was provided in New Zealand there was a very great increase, in the revenue, and there is not the slightest doubt that if we had larger powers to prevent evasion we should get a greatly increased sum. Hon. Members may suggest that that is all of comparatively mild importance when we have an income Tax which yielded in the past year £380,000,000 and from which we may expect in the present year to get probably £340,000,000 or £350,000,000. The loss by evasion was purposely put at a very low point, and many of us feel strongly that the yield would be considerably increased if the recommendations which were included in that Report were definitely adopted now.
Let us notice where the proposals and. the practice of the Treasury in this matter within recent years are leading us. One of the regrettable features of what has followed the publication of the Report of the Commission is that- there Las been no definite attempt on the part of the Government to adopt the recommendation on specific h-ads as a whole. There has been a piece-meal adoption of some and only a small number of their recommendations. On this point of the evasion of Income Tax the Chancellor of the Exchequer will probably agree with me that the 12 or 15 recommendations must be read together and, unless they are read together and incorporated in a proper Bill for the purpose, we are not going to gain appreciably by the kind of scheme on which he himself is now embarking, namely, the adoption of one, two or three, leaving the others out of
account and leaving the assessing authorities without the full power of inspection which they urgently require. Further, as far as I gather, the right hon. Gentleman proposes to do nothing at alt in the present Finance Bill to deal with the evasion of Super-tax. The Royal Commission drew attention to two methods of evading Super-tax which are well worth our consideration. First of all they pointed out that considerable sums were alienated for education and other purposes and were taken beyond the scope of Super-tax application, and that was done sometimes by revocable and at other times by irrevocable deed. That undoubtedly requires our attention. In the second place there was a considerable amount of evasion by the non-distribution or the withholding of profits for a time or their distribution in the form of bonus shares. That also was the subject of a unanimous recommendation by the Royal Commission, and I put it to the right hon. Gentleman very strongly, first of all, that he should give effect to all the recommendations of the Royal Commission on income Tax remission, and in any case, in the second place, he should definitely adopt the proposals regarding Super-tax which the Royal Commission unanimously recommended.
I want to say a word or two about the controversy regarding the importance of debt reduction on the one hand, and tax remission on the other. I listened with very great care to the speech of the hon. and gallant Gentleman the Member for Norwich (Mr. Hilton Young). He made two observations which appear to me to call for serious criticism in the light of existing industrial conditions. He was pleading very strenuously for further immediate reduction of taxation, and he said after all, a very large part of our business is conducted by small people, who require fresh capital from time to time, who could find it out of their savings when taxation was lower than it is now, and this enterprise is being hindered because of our Income Tax of 5s. in the £, or, as it will now be. 4s. 6d. The first reply to that point is this. No doubt the hon. and gallant Gentleman himself will be the first to admit that that class of business to a very large extent is tending to disappear, and that there has been an enormous growth of the trust and the syndicate and combine, or, at all events, of industrial enterprise on what
I will call more or less large scale principles. That is a very important fact to be kept in mind when the contention of the hon. and gallant Gentleman is advanced as a reason why we should try to get a further concession in tax remission. But there is another consideration which deserves our attention. Many of the smaller business men, in so far as they survive, in shops and small establishments, are even now practically beyond the reach of Income Tax, because under the new scales a man may have a wife and three children and one or two small insurances and other grounds on which he is entitled to exemption and may have £400 and upwards of clear income before he is liable to tax at all. As regards very many minor traders, that takes them beyond the reach of immediate Income Tax application, and if they are net in practice paying tax, because their income either falls below or does not much exceed that amount, quite clearly the hon. and gallant Gentleman's argument cannot apply to them. So that these are very definite restrictions upon the case which he has put before the Committee.
But by far the more important consideration in this connection is the review which I think we are bound to make of War-time finance. The National Debt has grown from £700,000,000 to nearly £8,000,000,000, and the Report of the Select Committee on War Wealth made it abundantly plain that there were about 300,000 people who gained anything between £4,000,000,000 and £6,000,000,000 during that period. If there had been any real attempt on the part of the late Government to deal with that problem, I am quite willing to concede that the case for some impost on capital accumulation would probably have been undermined, and, to some extent, removed, though I do not think it would by any means have wholly disappeared. But the Government, instead of trying to tackle the very great injustice which was clearly revealed by the Committee's Report, made a declaration which in effect put the Report in the waste paper basket. Nothing was done, and no attempt was made, under at least that head, to deal with the handful of people who had gained enormously, because of the crisis through which the country passed. I do not forget that taxation during the War was high, and I suppose most people agree that the proper course during a war is to try to
meet as many of our obligations by taxation as we possibly can, to keep down luxury expenditure, and to pass on as little as may be to succeeding generations. It may be said by hon. Members that there was the Excess Profits Duty. On that point I think the reply is very simple. First of all, as a fiscal device that was a bad tax. I have never met anyone acquainted with the principles of taxation who defended it in any shape or form. It was defended by the Government of the day on the ground that it was a rough-and-ready method of getting at the people who were making very large profits during the War. What has been the result? Thanks to the modifications and changes introduced in recent Finance Bills, by far the greater part of that Duty has been repaid, and I am very doubtful if in the long run we shall get anything under that head at all.
Then there was the device of the Corporation Profits Tax. I entirely agree with the criticism of that tax as a fiscal weapon, because quite clearly if a tax is based on aggregate profits before distribution it is not strictly a tax based on ability to pay. We object to every tax which is capable of such a criticism. Quite apart from criticism of that kind, the yield from the Corporation Profits Tax having regard to the very great needs of the country is comparatively small, so that it is a perfectly fair argument to use, however distasteful to some hon. Members, as was used by the British Association in reviewing war time financial conditions, that a limited number of people gained enormously out of the needs of the people during that crisis, and that there has been no proper effort to call upon them to make a contribution to the extinction of national indebtedness or to meet the current needs of the nation in respect of the very great amount which they have derived. That remains for many of us a great blot upon our war time finance, and it is not too late to try to find a remedy even now.
The real choice which faces this country is a choice between some determined effort within a limited time, it may be nothing more than a year, or two ahead, in order to get down the great burden of indebtedness, and what on the other hand must be a load of £300,000,000 or £350,000,000 annually in the service of debt. Having regard to the conditions, it will be a sound
financial policy to try to adopt the first of these two methods. I am not going to elaborate the argument that was used by my hon. Friend the Member for Keighley (Mr. Lees-Smith) with regard to the capital levy. None of us on this side of the House minimise the technical and other difficulties of trying to get at people who made enormous profits during the War. While we do not minimise the difficulties, we do say very definitely that those difficulties are no greater but in many cases are very much less than the difficulty of continuing with a load of more than £300,000,000 annually round our necks, or very nearly one-half of the amount which this country from year to year requires to raise.
We are justified in taking a strong and courageous step because, everything considered, our financial position at the present time is better than that of many countries who are our competitors. We could take that step without any very grave risk to our general economic strength, but if those countries recover and if they are going to enter markets in which we now find ourselves, if we are faced with a Europe which is restored, and with even more strenuous competition from the United States of America, then what is going to become of the argument as to the very great burden upon our industry and commerce if we are more or less irrevocably committed for many years ahead to the payment of an annual sum which represents one-half the total amount which we require to raise? It is perfectly plain that we cannot bring our taxation down to bed-rock level at the earliest possible moment by principles of that kind. While I have a perfectly open mind as to the form which any imposition of the kind should take, I say most sincerely that it is our duty, however late in the day, to remedy that wrong, so that we may be able to look our electors in the face and say that we did our best to see that nobody gained materially and financially because of the sacrifices which millons of our countrymen made.

Colonel WOODCOCK: May I join in the admiration of the Chancellor of the Exchequer for the business-like and exceptionally sound Budget which he has put before us. His financial statement is sound without being sensational. Many hon. Members on this side told their constituents that the methods adopted in
this Budget were the methods which they expected a Conservative Government to follow. In this Budget the right hon. Gentleman has endeavoured to legislate for every class of the community in the fairest possible manner. Industry has received the consideration which it deserved, the middle classes have not been forgotten, while the working man has also had his share. [HON. MEMBERS: "Oh!"] The working man has had his share in the proposals. He has benefited directly and indirectly. The central feature of the Budget is not simply the reduction of taxation. The Chancellor of the Exchequer would have made a very popular Budget if he had made greater remission of taxation; but he has tackled the problem of the redemption of debt in a way which shows well for the present and is laying down good lines for the future.
The maintenance of our Sinking Fund strengthens our national credit. It makes for the good credit of this country and for the good credit by which this country has to flourish. The hon. Member for Farnham (Mr. A. M. Samuel) told us yesterday that by continually strengthening the credit of the British Government, we shall enhance the market price of Government stocks and eventually produce a. lower rate of interest. This is exemplified by the great rise in the price of all our war stocks subject to sinking fund. If you compare the ratio of the rise in these stocks with the rise in the price of consols, which are not subject to Sinking Fund, it will be found that there is a great disparity in the rise of prices. The surplus which the Chancellor of the Exchequer has had at his disposal he has treated in a scientific manner and in a manner which should be an axiom of finance for Budget purposes. He has almost equally divided it between the redemption of debt and the remission of taxation. We are delighted that he has made a great point of the remission of taxation, because this country at the present time is burdened with taxation to the utmost of its possibility.
May I refer to the remarks made by the chairman of the Bolckow Vanghan Board, the well-known coal, iron and steel company. In his speech at the annual meeting, referring to the fact that for the first time in the history of the company no dividend had been
paid on the ordinary shares, he said it was due solely to the burden of taxes and rates. The figures he gave are very interesting and instructive. He said that the coal, iron and steel trade in 1914 bore rates and taxes to a sum equal to 5d. per ton, and in 1922 the rates and taxes worked out at 3s. 2d. a ton, or nearly eight times the amount of 1914. He gave figures of the education rates which were even more extraordinary. In 1914 the rates and taxes in respect of education amounted to 6d. per ton on the coal, iron and steel trade of the Company, but in 1922 it worked out at 6s. 2d. a ton, or over 12 times the amount of 1914. It will he seen that the limits of taxation as regards the industrial position are coming near to breaking point.
With regard to the redemption of National Debt, it is interesting to consider the difference in the ratio increases of our National Debt and the national debts of other countries between 1913 and 1922. From 1013 to 1922 our National Debt has increased 10 times. The national debt of France has also increased 10 times, that of Belgium 12 times, the United States of America 20 times from 1914 to 1922, and that of Germany 312 times. The high water mark of our national debt was nearly £8,000,000,000 or £7,988,000,000, but between April, 1919, and 31st March, 1923, we have paid off £450,000,000 of that debt in cash. How does this compare with other countries who have increased their indebtedness in a larger measure than we have. How, does their payment of debt compare with what, has been done by this country which has borne the greatest part of the burden of War debt? This country is gradually assuming the stability of pre-war days by the maintenance of its sinking fund. If we are going to maintain this country as the centre of the finance of the whole world it is essential that we should maintain the sinking fund not only this year, but in years to come.
Last night, during the Debate, my hon. Friend the Member for Ilford (Mr. Wise), in a well-reasoned speech, ably put, and which added very materially to the Debate, asked the Chancellor of the Exchequer if he would consider the setting up of a. Committee to go into the gold position in this country. Already in the United States a Committee has been formed to endeavour to elucidate the
material facts concerning this gold position. I feel that if the Chancellor of the Exchequer would consider this proposition, it would do a great deal of good, and would assist in getting information to elucidate the present gold position. In pre-War days, a certain amount of gold in this country was used in currency, and a certain amount was in the bank reserves, but in post-War days the general currency of the country has been in paper, and the gold has been held in reserve at the banks. If the bulk of this reserve is still kept there, is it not possible that we could utilise it in some way to pay our National Debt to America The hon. Member for Ilford put forward this proposition, and the remark was made on the other side of the House that America did not want the gold. It may not want the gold, but, at the same time, there is nothing against fulfilling our legal obligations by sending bullion to them to pay the Debt. If we could send £100,000,000 of that bullion, we should save £5,000,000 a year in interest, which is equal to 1d. in the £ off the Income Tax.
If this be pursued further, not only in this country, but internationally, it will be found that Germany has £50,000,000 of gold reserve, of which we are entitled to 22 per cent., which is equal to £11.000,000. I understand, from an answer in this House, that during the Reparation Conference, we bad a lien on that gold reserve of Germany. Why cannot we take our due share of this gold, transmit it to the United States, and eliminate a further part of our Debt You could carry this on to other countries. France has £200,000,000 of gold reserve, Italy £38,000,000, and Belgium £13,000,000. If this Committee were to consider the gold question as an international one, we might save millions of interest on our Debt to America. It must be remembered that times have changed very considerably since gold was wholly the standard of international exchange. In 1914, gold varied very little. In that year, the variation was only about one farthing in the £. During the present year gold sometimes has varied as much as 9d. in one day, which shows that the stability of gold at the present time is not what it was in 1914. The whole conditions of the gold standard have changed, and I only hope the Chancellor of the Exchequer
will see his way clear to set up some Committee to inquire into the whole of this gold reserve, and see if it can be utilised to a better extent.
All of us have our ideas of how we could assist to increase the Revenue, and, at the same time, remit taxation. There is one thing to which I should like to refer, and that is the subject of the Stamp Duties, to which allusion was made by the hon. Member for the Mansfield Division of Nottingham (Mr. A. J. Bennett). The Stamp Duty of 1 per cent, on registered securities has been a specially onerous one in connection with registered British securities, and I am sure it has led to the contraction of a great deal of business. It will be remembered that the right hon. Member for West Birmingham (Mr. A. Chamberlain) raised this tax from ½ per cent. to 1 per cent., hoping to secure a corresponding increase, of revenue. It has not done so to the extent which he hoped, and I trust it is not too late for the Chancellor of the Exchequer to consider whether it would not be reasonable again to reduce this Stamp Duty to ½ per cent. on registered securities, as in all probability he would get the same revenue with a greatly increased amount of business. Then, again, there is the tax on foreign bearer securities which, in 1920, was raised from 1 per cent. to 2 per cent. The taxation has not proved successful in bringing in revenue, and, in my opinion, it has prevented a lot of good business coming to this country which otherwise would have come here. We know well that the Chilean Loan was lost by only ¼ per cent. The sum which was bid for the Chilean Loan included the 2 per cent. taxation, so that had taxation been only 1 per cent., we should have got the whole of that Chilean Loan. Not only do we lose the 1 per cent. of taxation, but, further, we lose the loan to this country, and, beyond that, we lose the trade which would have come with it.
There is one point to which I would like to refer as representing an agricultural constituency. We in the West of England are very grateful for the small remission in the Cider Duty. We are also glad that the postal rates have been changed in the farmer's favour. These are small concessions, but I am sure it would have warmed the hearts of the farmers if the Chancellor of the Exchequer could have given them some hope that some temporary measures were going
to be made to assist them immediately in the present crisis through which they arc going. I feel confident that many of us would have sacrificed even some of our political principles, if it were possible temporarily to assist the farmers during this year, with the hope that a good summer would put them right financially in a way that they were prior to the last two years. With regard to economy, I am very glad the Chancellor of the Exchequer referred to his anxiety that it should be continued in every Department. Not only do I hope it will continue, but I hope it may increase. The Geddes Committee has done good work, but the force of its work is nearly expended. May I suggest, with great respect, that it would be a good thing if the Chancellor of the Exchequer could set up another Committee—a super-Geddes Committee, that would again attack the Departments which are still overstaffed, and make a final clearance of numbers of those officials who are maintaining Departments which are now redundant? I fear that I have overstepped the time which is generally given to a Member who is for the first time addressing this House—[HON. MEMBERS: "No!"]—but I want to express my conviction that the Government have been able to propound a Budget which is on traditional Conservative lines, which is financially sound and business-like, making a fair distribution of the burdens of taxation amongst every class of the community of this country.

8.0 P.M.

Sir ROBERT HAMILTON: It would be an impertinence on my part to Congratulate the Chancellor of the Exchequer on the clarity with which he presented the Budget. It is the first Budget statement that I have had the privilege of hearing in this House, and I can only say that I cannot imagine a complicated Budget being more clearly presented. The Chancellor of the Exchequer may, I think, congratulate himself already, for we have seen, both in this House and outside in the Press, an enormous amount of disagreement, and everybody complaining as to the manner in which the Chancellor of the Exchequer has used his surplus. Of course, we all know that everybody thinks he has the right to advise the Chancellor of the Exchequer as to how he should use any surplus. Some of those suggestions are good, undoubtedly. Some are less good, and some
are very bad indeed. We have just listened to a suggestion from the other side of the Committee which, I must confess, I myself had some difficulty in understanding. As it presented itself to me, the suggestion was that we should charter a ship, collect all the gold we could get from Germany, and what gold we could get out of France, ship it off to America, and so pay off our Debt to America. I leave it to the Committee to consider under which category of suggestions a. suggestion of that sort comes. I may say that, as far as I myself am concerned, I heartily approve of the line laid down by the Chancellor of the Exchequer for the redemption of Debt, and I go still further. I go the whole way with the right hon. Member for Paisley (Mr. Asquith) in saying that that. is the object which we have got to aim in future years. We have got to have a sinking fund in the future as large and as effective as our sinking fund was in the past. It is only by the paying off of our Debt that we can hope to restore prosperity, cheapness, and employment in the country again. As for the manner in which the Chancellor of the Exchequer employed part of his surplus in taking 1d. off beer. I must say that I—and not I alone—have a great deal of which to complain. There is a very large section of the community who think that this surplus might have been very much better employed. We all know—it is merely repeating what has already been said in this House, but do not think it can be repeated too often —we all know the importance of sugar, how sugar is consumed by every household in the land, how important it is to children and to the housewife. A reduction in the price of sugar means an enormous amount, not only to the holder of the household Budget, but to the wellbeing of the people of the country. Further than that, a reduction in the price of sugar goes to help the allied trades of confectionery and biscuit-making, and such trades for which England is famous, and the products of which are exported to all parts of the world. To take a penny off the pint of beer at this time seems to me to miss the real object to which the Chancellor of the Exchequer should have directed his surplus. Beer, we all know, is very highly priced, and we have waited long for a
reduction, but I think it is the duty of the community to wait longer while more important things are reduced in price first, and there can be no doubt that sugar is infinitely more important than beer.
There is one other point I wish to make, and that is that we cannot hope for any real reduction of taxation except by economy in administration, and that, I think, is a point which has been rather passed over in the Debate. I would like to remind the Committee of the figures, of which Members are doubtless aware. During the past financial year the expenditure on defence was £44,500,000 more than it was in the year before the War. The expenditure on the Post Office and Customs and Revenue Departments was £33,500,000 more than the year before the War, and the other Supply Services nearly £200,000,000 more. There is a vast reserve there in which economies can be effected, and I think it is to that reserve that we must look for economies to be effected, and for us to get a real reduction of taxation in the future. It was very well said by a distinguished French politician, "Give rue good policy, and I will give you good finance." It is not only good policy at home to have economy, but it is good policy abroad that is needed. I do not know if I would he in order in referring to the expenditure in Mesopotamia, hat we cannot avoid, when discussing the Budget, considering how money has been spent abroad which might have been very well saved. I can only hope that the Chancellor of the Exchequer will be enabled to give effect to his good intentions of reducing debt by the Government of which he is a Member pursuing good policies abroad and economy at home.

Mr. WHEATLEY: I suppose it is the proper thing in this discussion to begin by congratulating the Chancellor of the Exchequer on the excellent manner in which he introduced his Budget. I can quite sincerely say that I listened with the greatest admiration to his speech, but I cannot say honestly that I think there is anything great or anything noble in introducing to a House like this such a Budget as Fie presented. It consists merely of convincing the toiling multitude outside that the richer section of the community, for whom the Chancellor speaks, have put into the National purse some-
thing which can be proved never to have been there. As I listened to his speech yesterday, I was reminded of another financier. Forty years ago I stood with open-mouthed admiration on a village showground while a financier of those days took three half-crowns from his pocket and pretended to put them into a purse, and then, having rolled up his sleeves, convinced the admiring multitude that everything was straight and aboveboard, and he succeeded in selling the purse for half-a-crown to a man named Henry Dodd.

Mr. J. JONES: That w is not in Scotland.

Mr. WHEATLEY: Henry, having examined the purse, discovered that he had been deceived. The money which he understood to have been there was not there at all, because what the conjurer put in with one hand he took out with the other. It seems to me that is exactly what happens in national finance. If you look at the national purse or the national Budget, you will find that the amount taken out by the interest-drawing classes it approximately the amount of money contributed in Income Tax and Super-tax. If you assume, what I think is a very reasonable assumption, that the class to whom we owe the National Debt is the same class who pay the Income Tax and Super-tax, you will find that they are taking back almost penny for penny everything that they contribute in the way of taxation in the enormous sums which the nation has to return to them as interest on their loans. The total estimated amount of revenue from Income Tax and Super-tax for the ensuing year is £390,000,000, while the amount to be paid in interest is £310,000,000. There is another feature about this interest question to which it is worth while drawing attention. Of every 20s. collected in taxation in this country, 7s. 6d. is going in interest. I find, further, that of the remaining sum, 2s. 10d. is to be spent in preparation for war, so that nearly all the revenue goes either in paying interest on past wars, or preparing for future wars, which we are told will never take place.
I was very much interested in the argument put forward yesterday by the Chancellor of the Exchequer, and which has been referred to to-day, that in taking the surplus which was at his disposal and using it in the interests of the rich, he
was giving a stimulus to industry. Over a full year the concessions made in Income Tax and Corporation Profits Tax amounts to £38,500,000, and that sum unquestionably will go into the pockets of people who hold the surplus wealth of this country. He tried to justify it solely or the ground that it would stimulate industry. I heard all over the House to-day people acquiescing in that argument, and I wondered if they really believed it. I wondered if the members of the present order of society who are in this House are so ignorant of the working of the forces of that society as their speeches seemed to indicate? Can they tell me of a single industry to-day which is depressed because of a shortage of capital?

Major WHELER: I will tell you one—agriculture!

Mr. WHEATLEY: If agriculture be -undercapitalised, it is not because there is a shortage of capital in this country, but because the people who hold the capital do not think it would be a profitable investment to put it into agriculture. How is agriculture 'to be helped by placing in the hands of those people who have capital, which they will not invest in agriculture, a further £38,500,000? I know there are many cases where farmers are short of capital, but these farmers are short of capital because the holders of capital do not believe that by investing further capital in the farming industry there will be a profitable return on the transaction. What is the meaning of a falling bank rate? It surely indicates that the supply of capital is greater than the demand. When capital is scarce industry is booming, and you 'have the bark rate soaring, but when there is surplus capital which cannot find an investment and it gets into the banks, in ever-increasing amounts, then your bank rate falls. I am sure there is not a single successful business man in this House who during the past 12 months has not hail experience of large sums of money lying in banks on deposit receipt, because he could not get a profitable outlet for it in the industries in which he is interested.
It is not capital you want to stimulate industry to-day; it is orders. Anyone in business to-day will tell you that. I could take you to districts which I know and show you millions of capital rotting. You
have machinery rusting, workshops and warehouses depreciating. You have capital there which is not being used, and to talk about more capital being necessary, and to give that as the reason for diverting to the pockets of the rich the £38,500,000 which is going to be saved by this reduction in Income Tax and Super-tax is not paying a very high tribute to the intelligence of this House. You had an excellent opportunity of stimulating trade by devoting the sum which is at the disposal of the Chancellor of the Exchequer to the abolition of the food taxes. Had you done this, and in that way increased the purchasing power of the people, in that way and in that way only you could have stimulated industry. But what you have done will cripple industry, to the fractional extent to which it influences it at all, still further, because under this Budget you are going in the direction of making the rich richer and the poor poorer. It is amazing at a time like this, when the poverty of the country is being generally deplored, when our working classes, by the continuous depression in their wages, are being reduced to a state of destitution which they have not experienced for many years that the Government should have missed such an excellent opportunity of restoring to these people the surplus that would never have existed had you not robbed that same class of that surplus by curtailing expenditure on education and pensions and unemployment doles during the past 12 months.
I will give another example of how the present ruling class by its financial policy never contributes seriously to public expenditure. On page 7 of the White Paper you will see that the total estimated expenditure of the Ministry of Labour for the next 12 months is £16,187,000. Where is that money to be got? You find it almost in the neighbouring lines. You will find that the revenue of the Ministry of Pensions is to be reduced in 1923–24 by 116,333,000. So here you have the Chancellor of the Exchequer requiring £16,000,000 for the Ministry of Labour, and he finds the £16,000,000 by deducting it from the Ministry of Pensions. In other words he gets his money by robbing the blind man's penny. I may draw attention to another aspect of the attitude adopted towards public finance by the occupants
of the benches opposite. I remember the statement made by the right hon. Member for Hillhead (Sir R. Horne) last year when introducing his Budget:
 Our total debt to the United States of America is 4,166,000 dollars which, valued at three dollars twenty cents to the £ —the figure to which the exchange fell two years ago—is equivalent to £1,301,875,000. At an exchange of four dollars forty cents to the £—it is rather better than that to-day—the sterling equivalent is about £946,820,000, representing a saving to the value of £355,000,000.
He proceeded to say:
When the exchange is restored to par, as I hope it will he before very long, the sterling equivalent will be £856.000,000.
This country owed a certain amount of money to the United States. As the pound sterling appreciated in value, as its purchasing power increased, our debt to America automatically decreased, and by the appreciation of the pound during the last year, without paying a single penny to the United States the debt of this country was reduced by £355,000,000. Jo other words it was reduced by 27 per cent. [Hoy. MEMBERS: "Quite right."] Hon. Members opposite say that that is quite proper. "The pound having a value in purchasing that it had not the day before why should we not proceed on the sound principle that wealth consists of the goods we buy with our paper money and not of the paper money itself?" That is a perfectly sound principle in finance and in economics. But if that doctrine is good for America what is wrong with it for home? Has not the purchasing power of the pound appreciated as much at home as it has appreciated in the international exchange, and if it has increased in value and the purchasing power of the pound justifies you in effecting a saving of 27 per cent. in your debt to America why does it not justify the working classes of this country in affecting a saving of 27 per cent. in the debt which they owe to you? The debt being due to America you arranged it in such a way that as the purchasing power of the money went up the actual paper value of the debt was correspondingly depreciated.
Suppose that the same principle were applied to the National Debt here, suppose that this year the purchasing value of the pound having gone up to the same extent as it has in the case of America,
the people of this country would claim, if they had as much financial intelligence in their minds as your class have in their minds in dealing with financial affairs—suppose that they applied to you the principle that you have applied to America. Then the total indebtedness of this country would be automatically reduced, apart from your sinking fund, which is a mere flea-bite, by £1,786,820,000. Talk about reducing it by £40,000,000 or £50,000,000 a year! Here is a means whereby you reduce your debt automatically and in one year by 1,786 millions. I think I have said enough to convince any reasonable and unselfish people that those on the other side of the House and the class whom they represent take out of the national purse considerably more than they contribute to the national purse. After all, the Budget should be judged not merely by the amount that a person puts into it, but by the amount that the same person takes out of it. If you are taking more out of the National purse than you ale putting into it., you have no right to get up on a pedestal and pretend to the toiling multitude of this country that you are contributing so substanitally towards the cost of running the nation that your industry is crippled and you are suffering in consequence. As a matter of fact, the expenditure of the nation is maintained to-day by the people who have been crushed into destitution by the operation of your industrial system.

Mr. HANNON: After the delightful disquisition we have had on the new Glasgow economics, I offer very briefly a few observations.

Mr. MAXTON: On a point of Order. Is it not a fact that the whole science of economics took its origin from the City of Glasgow?

The CHAIRMAN: The origin of the science of economics is not a matter for the Chairman.

Mr. HANNON: I at once admit the historic origin of the science of economics, but my hon. Friend on the other side will admit that under the modern interpretation which has been attached to its application, it has undergone a very curious change. The hon. Member who, before the interruption, made such a delightful speech, one congeries of fancies,
said that we ought to approach the funding of the internal debt of this country on the same principle as we applied to the funding of our debt to the United States. He fearlessly told the House that, if that process were resorted to, we could reduce the National Debt by something like £1,700,000,000. In other words, the investors of this country who put their money at the country's disposal at the moment when the country required it most, are to be robbed deliberately at the instance of the State by £1,700,000,000. The whole of the hon. Member's speech watt conceived in that spirit of class distinction and class hatred which ought once and for all to be exterminated from the public life of this country. On this side of the House we do not talk about class. We claim to represent all classes, and, indeed, on this side we are better entitled to represent the interests of the mass of the wage-earners than are hon. Members on the other side. The whole of she hon. Member's speech was of the kind which does not at all help in solving the economic and social difficulties with which the country is confronted. On the contrary it is calculated to confuse public thought, or to confuse the thought of those who take their economics from the teachings of the hon.. Gentleman and his colleagues.
My object in rising was to offer my sincere congratulations on behalf of the industry of the country to the Chancellor of the Exchequer for his courage and sound judgment in the introduction of a -Budget which is fair and reasonable and calculated in large measure to stimulate enterprise in these critical times. On the whole, in the face of a difficult situation, in exigencies almost unparalleled in our economic history, the Chancellor of the Exchequer has done extraordinarily well, and deserves the gratitude of the whole industrial and commercial community. Take a few of the points from the Budget speech upon which comment may be made with all the reticence which one ought to use after praising the Budget proposals. First of all with regard to the postal rates, although they will give immediate and substantial relief to trade, I would ask the Chancellor to consider whether something cannot be done to cheapen the sample post rate to India, China, and Japan. A very considerable volume of trade is carried on with these great
Oriental communities, and a good deal of advantage would be derived by our exporters if the sample post were substantially reduced. With regard to the beer duty, which is the special consideration of so many hon. Members on the other side, I think the Chancellor's action deserves the appreciation of the entire community. In this country beer is not merely an article of drink; it is to some extent an article of food. The arrangement suggested by the Chancellor to secure that, the reduction of the tax will correspond with an improvement in the quality of the beer is a proposal which I am sure everybody will appreciate. I submit to my hon. and gallant Friend the Financial Secretary that when he and his colleague the Chancellor were considering the concession they should make on beer they should not have forgotten whisky. The whisky duty at present is crippling an important Scottish industry. I have not the least doubt that hon. Gentlemen opposite are profoundly interested in the development and expansion of Scottish industry. The whisky industry is by no means the least important of the great enterprises with which our friends north of the Tweed are identified.

Mr. KIRKWOOD: The most important.

Mr. HANNON: I am glad to have that admission from the hon. Member. The whisky duty of 72s. 6d. ought to have been reduced by 22s. 6d., making it the even 50s., and I say that those who represent the trade are quite prepared, if this concession is made, to give the entire benefit of the reduction to the consumer. The result of that would be that the bottle of whisky which now sells for 12s. 6d.—hon. Members opposite who do not indulge in whisky probably do not know the price—will be reduced to 10s. [An HON. MEMBER: "Reducing the cost of living!"] Think of the happiness and the humour, the joy and the delight stirring in he family homes of Scotland if the price of the bottle of whisky were reduced from 12s. 6d. to 10s. My hon. and gallant Friend the Financial Secretary will for ever be the personal friend of every Scotsman and will go down in Scottish history as one of Scotland's greatest benefactors, if he will take into his kindly and generous consideration a reduction of this heavy burden upon a great and essential
national industry. I am glad that the Chancellor of the Exchequer has seen his way to make a concession upon mineral waters, but I am sorry that he confined his good action to the sweetened variety. I should have wished, as I daresay would many hon. Members, that the concession was a little larger and that it embraced soda water. [HON. MEMBERS: "Hear, hear!"] Well, I feel very strongly on this point because of the injustice done to Scotland in not reducing the duty on their whisky.

Sir W. LANE MITCHELL: You are not a Scotsman.

Mr. HANNON: I am quarter a Scotsman, and my hon. Friend has no right whatever to challenge my nationality in this Debate. What I say is, that soda water should have had the Chancellor's consideration just as much as sweetened waters. However, one cannot but be pleased with the Budget, because, on the whole, it gives a new stimulus to trade and industry in this country. In spite of the arguments put forwards by hon. Members who seem to think that when you take off taxation you are patting it into the pockets of the rich people of this country, the fact is, that by doing so you are enabling that money to be invested in fresh enterprises, and bringing about the steady growth of trade. [Interruption.] Well, hon. Members must admit that trade is reviving steadily every day, and the more trade revives the more capital it requires. By the utilisation of these concessions more capital can be secured, and, despite the statements of hon. Members opposite, that is absolutely necessary for many of our industries to-day. I wish the Chancellor had taken his courage in both hands and taken a shilling off the Income Tax. At. the present time, and in the depressed condition of the country, whatever gives a stimulus to trade and whatever creates that atmosphere which will give a new feeling of confidence and hope to those engaged in industry should be encouraged. I should like the attention of the Financial Secretary for a moment on this point.

Mr. J. JONES: Listen to the oracle!

Mr. HANNON: There are certain oracles who have not made a great success of that particular trade. The Corpora-
tion Profits Tax, which was so strongly condemned by the ex-Chancellor of the Exchequer this afternoon, ought definitely to have been removed from our scheme of taxation. I wish the Chancellor had seen his way to abolish it altogether, and I would urge on the Financial Secretary, if, in the scheme of taxation of the current year, he cannot now abolish this tax, that he will at least fix a date within the present financial year when it will disappear. Great enterprises throughout this country which are burdened and embarrassed by the existence of this tax, even in its halved condition, would regain new life and vigour, if they knew that at a certain date it was going to be entirely removed. T wish to mention one further matter, and that is whether more careful consideration cannot be given to the question of the funding of pensions. The suggestion was thrown out to-night that in a few years millions would be coming off pensions. That process is hound to take place, but should we bear from year to year the entire burden of pensions out of revenue instead of making such provision as would equalise the obligations over an extended period of time? I think the Treasury would be well advised if they took into careful consideration the example of Chancellors in this country when a similar problem arose following the Napoleonic wars, and also the example of Finance Ministers in the United States following upon the American Civil War.
In 1822 the problem of discharging from revenue the then pensions obligations was an exceedingly grave one, and after a great deal of difficult negotiation the Chancellor of that time, Vansittart, conceived a scheme by which an arrangement was made to extend the obligation over a period of 45 years. It was an exceedingly unpopular scheme and was denounced by the economists of the time. It was violently opposed by Ricardo, Hume and Brougham and, indeed. it brought about Vansittart's downfall, hut in the following year when Robinson was Chancellor, the scheme was completed and the pension obligations of that time were extended over a period of 45 years. At the close of that period, in 1867, when Disraeli was introducing his Budget and when the last instalment of the terminable annuity into which the pensions burden
had been converted was about to be discharged, he paid a tribute in this House to the excellent qualities of the scheme which resulted in converting the pensions obligations of 1822 into terminable annuities, and, indeed, he employed exactly the same principle himself in converting into terminable annuities a debt of about £24,000,000 which arose out of the aftermath of the Crimean War. I suggest to the Financial Secretary that, with this great burden resting upon us now of £832,000,000 of capital liability for pensions, having paid off already £470,000,000 in pensions, we ought to adopt a device which would equalise the burden Over a longer period of time and make posterity pay at least some part of the cost of the tragic war through which this country has passed. I am convinced that the Budget introduced yesterday will render great service to industry. I entirely disagree with the contention that this is a Budget which makes the rich richer and the poor poorer. On the contrary, this Budget will open opportunities, will increase employment in this country, which will strengthen the hands of manufacturers in dealing with the exploitation of new outlets for their products, will encourage trade and enterprise in all directions, and will do much to raise the country from the slough of despond in which it has been struggling for some years past.

Mr. CHARLETON: I have listened with some confusion to the paean of praise that has followed the lowering of the Income Tax, and I was also somewhat perplexed when I saw the propaganda that was going on in the Press anticipating the lowering of the Income Tax. Those who advocated it all said that a revival of trade would follow, but they did not explain why. The inference, as I gather from some of the observations of the hon. Members who have rejoiced at this lowering of the tax, is that there is no money, but, on the other hand, there are those who have stated that, they want something else done because they have got a lot of money to lend and cannot lend it., so that I am somewhat perplexed as to what they age really after. If I may take an example beloved of all teachers of economies, suppose Robinson Crusoe, out of the stores and cargo of his ship, had opened a store on his uninhabited island.
it would not be said that he was failing for lack of capital, but rather that he was failing for lack of customers, but, if he had taken the view expressed by the hon. Members opposite and below the Gangway on this side of the Committee, the only way to save himself would have been to have turned wrecker and to have wrecked passing ships, hoping that all the people on them would have died, and to have unloaded their cargoes and made his store bigger; in other words, to have got more capital and, having got more capital, that he would have been safe. Of course, we know that that argument is all nonsense.
What we lack to-day is not capital, as the hon. Member for Shettlestone (Mr. Wheatley) has pointed out. We have more capital than we need, though not more, perhaps, than we want. There aver many people who want more capital, with a, view to drawing more interest, dividends, etc., but we do not need very much more capital, and, as a matter of fact, we have factories and workshops and up-to-date machinery rotting, because we cannot find employment, for them. I, therefore, suggest that, if the Chancellor of the Exchequer had remitted the food taxes, so that the people who spend all their income could have circulated that £32,000,000 in industry, you would then really have set in motion the wheels of industry a little faster than they are going at the present time. The hulk of those who are receiving the benefit of the remission of Income Tax will not be spending it, hut will he saving it., and, where opportunity occurs, they will be exporting their capital into foreign countries, even to enter into competition with us here. They will not hesitate to spend it in those countries which are entering into competition with Great Britain, and they will not mind spending it even in the Ruhr to help exploit the iron and coal of the Ruhr. They will not mind spending it anywhere where it will yield interest, regardless of whether or not it hits us here. There appears to be very little patriotism where capital is concerned.
The hon. Member for Moseley (Mr. Hannon) took exception to the suggestion of the hon. Member for Shettlestone that we should treat the domestic owner of debt within our shores in the same way as we have treated the owner of debt in
America. That brought down the wrath of the hon. Member, but I would point out that inversely he and his friends have done the very same thing, for whereas they lent £100, say, when prices were up, that £l00 is now worth nearly £200, and if they lent, say, a motor car back in 1915, they are now demanding two motor cars in return, which means an additional burden on industry. No matter how much you pile up capital, it will be just the same as Robinson Crusoe continuing to wreck ships in order to make his emporium larger. You need, after alb a greater number of customers. An hon. Member spoke about beer. I must say,.as a life abstainer, not, very much interested in beer as such, that I rather think the working man, instead of being benefited, is being done down again, as usual, because, so far as I understand it, the reduction puts a premium on the brewer taking out what is called the nourishment of the beer, because it seems to me that the lower the gravity of the beer the more the brewer makes out of it, and I have been wondering whether the hon. Member for Dundee (Mr. Scrymgeour) has not been in collusion somewhat with the Chancellor of the Exchequer on this matter. We do feel that this is an effort that ought to be made to reduce the debt.
One point has been lost sight of on the Government Benches and below the Gangway. Since I have been in the House we have been told time and again that we want prices reduced. If the economists are right in their quantity theory of money—and that theory is acscepted—surely we all will agree that the sooner the debt is extinguished the better, because, after all, the script of the debt is used as currency, and that is really inflation. If we are sincere, and it is not a cry to reduce the wages of the workman, then we should agree to the course suggested. I do say, and I am supported in this by the economists, that prices cannot fall while this inflation goes on. It does seem very unfair that all over the country since the Armistice raids have been made on the wages of the worker, and his wages have been reduced to the extent of about. £600,000,000 per annum—and even now some people arc not satisfied—and yet when you have a few millions surplus it has again to go into the pockets of the wealthy.
Had we stabilised our finances somewhere round about 1920 or 1921, rather than to have thought to bring down prices, we should not have been in the predicament we are to-day. Everyone would have known where they were, and the purchasing power of the workers would have been greater. We have been told about the need for getting foreign markets. There is a classic which says that "the fool hath his eyes towards the ends of the earth". But the action of the Government has further depressed the markets, and I feel, and we all feel in this quarter of the Committee, that in taking off the Corporation Profits Tax—it may be a good or a bad tax, I am not expressing any opinion about it—but in remitting taxation in that direction, we feel the Government are not doing the best they can for the nation, or that which would set the wheels of industry in motion and bring the unemployed off the streets. The Government are simply putting a brake on to industry, and again doing what the Scripture says, giving to him that hath and taking away from him that bath not even that which he hath.

9.0 P.M.

Sir ALFRED BUTT: As a new Member, speaking for the first time, I should like to express my gratitude to the Chancellor of the Exchequer for having placed the balance sheet of the nation before us in such dear and understandable terms. I listened yesterday with great respect to the speech of the Leader of the Opposition (Mr. MacDonald) and to-day to the speech of the right hon. Gentleman the Member for Paisley (Mr. Asquith), but I must confess that I was far more in sympathy with the speech yesterday of the right hon. Gentleman the Member for West Swansea (Sir A. Mond) and to-day with the speech of the right hon. Gentleman the Member for the Hillhead Division of Glasgow (Sir E. Horne). We expect caution from the Chancellor of the Exchequer. The abnormal crisis through which we are passing also, T think, demands courage and imagination. I confess some disappointment with the Chancellor's statement, and that he has not seen his way to make even more drastic reductions in the Income Tax. It is also a great pity that he has not wiped out entirely the Corporation Profits Tax. Another matter which is very disappointing to a very large number of Members of
this House in that nothing has been done in the way of making any rebate in the Sugar Tax. We all realise that sugar is essential for the children. If we do not look after the children to-day we cannot hope to have an A1 manhood in the future.
In addition to these two things, there is a very urgent need for the reduction of the Entertainments Duty. According to the figures of the Chancellor, he has at the present moment no surplus to provide for any further remissions including this Entertainments Duty, although in passing I would draw the attention of the Committee to this fact that the total estimated expenditure for this year is £816,000,000 which is £4,000,000 more than last year. Having regard to the fact that expenditure is decreasing, I cannot help thinking that the Chancellor of the Exchequer has made more than 'adequate provision for all contingencies. Against that is the clear fact that the revenue, which has been steadily increasing during the last year, is only estimated at £818,000,000, or a decrease on last year's figures of £96,000,000. The Chancellor of the Exchequer no doubt has good reason for being conservative in the one case and pessimistic in the other.
That brings me to the question of how additional moneys can best be found for very desirable remissions of taxation In that respect I want to refer to the question of our national indebtedness. We have reduced this during the last four years by the colossal figure of 7 per cent. Whilst I agree it is the general opinion of the House that we should continue to provide some adequate amount to reduce our debt in the future, I do not think we want to exaggerate it at the risk of stultifying the revival in. trade. The hon. Member who spoke a little while ago said that in his opinion the reductions already made were for the wealthy. That is a short view. If you are going further to reduce taxation as I have mentioned you will undoubtedly give another and great fillip to trade. Past experience shows that in this country when taxation has been light, production has been heavy. If by reducing taxation you can create a greater incentive to the manufacturers and traders to produce goods, you are going to help to absorb far more of the unemployed—and this is not a party question, it is a national necessity.
Secondly, you are going to bring down the cost of living. That, I think, is desired on the opposite side of the, Committee as well as on this side. Thirdly, you are going to produce goods at such a price as will increase your export trade, and if you increase your export trade you are going to increase the wealth of the country. There is no necessity for a moment to go on starving the nation in order abnormally to reduce the debt. I hope the Chancellor of the Exchequer will consider the question of making further and considerable remissions of taxation. Let me refer to the question of the taxation of letting. To-day, when all luxuries and many necessities of life are heavily taxed, I cannot think there is one serious argument against the taxation of betting. It is desirable in the interests of the nation that we should maintain a high standard of horse-breeding, for which this country is famous, and from which we derive a great deal, of wealth. But that hits nothing to do with betting —[HON. MEMBERS: "Hear, hear!"]—and I should like to see the Chancellor of the Exchequer definitely announce that he has adopted the principle of the taxation of betting, and that he was setting up a Committee to consider the means and methods without considering the principle.
There are two other small matters to which I wish to refer. One is the interest on the debt of the United States of America. I realise that the Chancellor of the Exchequer accomplished a titanic task when he, went to the United States. I have always been of the opinion that if the position of America and England as a result of the Great War had been submitted to an independent arbitrator he would have found that if he had placed the number of lives this country sacrificed in the Great. War against the money which was advanced to us by America the Americans would owe us money. It is quite true that that question has now been settled, but there, is one bad feature about it, and it is that the interest is not payable in sterling, but in American currency. The result is that when that interest comes round for repayment the exchange in America goes against us and it costs us so much more to pay the interest. In the Blue Paper which the Chancellor of the Exchequer has furnished us I see that there is a list of
the money owing to this country amounting to no less than £2,000,000,000. I do not think any of us are under the illusion that that sum of money is worth its par value. If we have to pay our own debts sooner or later I think it is reasonable to suppose that we shall realise 50 per cent. of those debts which are owing to us. In that case I do not think it is unreasonable to ask the Chancellor of the Exchequer to relieve our national expenditure by giving us credit for the modest sum of 3 per cent. interest on £1,000,000,000.
As a small item of revenue which I think is escaping the notice of the Chancellor of the Exchequer, I would mention the position of aliens who come over here for less than a year and trade in this country. Within by own knowledge I know of cases of hundreds and hundreds of people who come over here, take money out of the British taxpayers' pockets, go back to their country of origin and never contribute anything to our Exchequer. I urge upon the Chancellor of the Exchequer to tax those people at the source because many thousands of pounds could be easily raised in that way. As a justification of my suggestion I may say that that is what happens in their own country of origin. I urge hon. Members opposite to realise that the quickest road to prosperity in this country is to restore confidence and optimism amongst the manufacturers and traders, and if we can get a still further reduction in taxation I honestly believe that the gross revenue at a lower rate will be far higher than the amount which has been budgeted for.

Mr. HEMMERDE: I do not share the optimism of the last speaker and I am glad the Chancellor of the Exchequer has not budgeted on the idea that we are going to get half the money which is owing to us by other countries. I do not share the views which have been expressed to-day in regard to many parts of this Budget. I have listened to the whole of the Debate and there is one point in the Budget which has not been mentioned at all, and at the risk of seeming to take the Committee off more important matters like the Capital Levy and other questions such as the National Debt and the funding of pensions, I want to make a protest, following one which I made several years ago in this House, against
one bad blot upon the Budget and the whole financial system of this country. It may be a small blot, but merely because the thing is small if it is unjust it should not be allowed to remain.
When the Entertainments Duty was first brought. in, I strongly opposed it as being bad economically, being perfectly sure that certain results would happen. At that time the Treasury brought in their proposals without the slightest idea as to what they meant, and in debate they had to abandon half of them. They came down here with a proposal to tax complimentary tickets, the free tickets with which theatres are, to some extent, packed on the first day, but after discussion they had to withdraw that proposal. I am dealing with that part which affects theatres, music-halls and cinemas, and I differentiate this from the part that deals with cricket and football matches and the like. I can understand that many people might defend taxes upon the spectators at a cricket or a football match, because it is an easy way of raising money, and if the people affected do not care to go to these matches, no one suffers very much. I wish to deal for a moment with the great financial stress caused by this tax. As a matter of fact you are deliberately penalising all that is best in music and the drama in favour of all that is worst in both. I have not the slightest doubt, because the Chancellor of the Exchequer practically said so the other day, that he is under the delusion that when you put a tax upon theatre tickets the theatre is merely acting as a convenient medium for collecting the tax.
I say without fear of contradiction from anyone who understands economy that the whole of that duty, or practically the whole of it, falls upon the theatres, and not upon the people who pay for their seats. The ordinary man and woman in this country have limited means. If they want to amuse themselves they have a certain amount of money to do it with, but if you raise the price of theatre and opera tickets and cinema tickets beyond a certain figure, you have the certain result that so many less people go to those places. These people have to make a certain amount of money go a certain way. If the people go less to these places, then this is not a tax collected from the amusement hunters, hut in the end it becomes a charge upon the theatre enterprise itself. One of our great groups of
theatres last year traded at a loss of £12,000, although it collected £197,000 for the Exchequer. How can that possibly be right? This is really a tax on turnover, and who else is there in the country who is taxed upon turnover? Hon. Members opposite want the Income Tax reduced, and they say that the Corporation Profits Tax is a bad thing, but they do not allude to this tax upon turnover, which is not only bad, but from the point of view of ordinary trade and commerce is a detestable tax. You actually find a big industry taxed to the extent of £197,000, while there is a loss of £12,000 upon their trading. That is bad for the industry and bad for employment, and it has a much worse effect than actually taxing the industry.
The theatre, the music-hall, and the opera in this country during the war were about the only commercial enterprises that were unable to raise their prices, and they could not raise their prices because the amount by which the prices might have been raised has simply been taken by the State. Suppose that that body of theatres which collected £197,000 during the last year had been allowed, instead of putting on that enhanced value for the benefit of the State, to put it on for its own benefit, you would then have had a commercial undertaking making a legitimate profit. if everything connected with a theatre is raised—and rents are raised, the expense of lighting is raised, and practically everything else connected with the theatre is raised in price—what could be more unjust than that, where everything is raised, you should actually prevent those entertainments from raising their prices by intercepting, on behalf of the State, that in crease in price which is the only increase they could possibly put on, if at all, for their own benefit? People may say that this is a very small matter, but I do not think it is. The Entertainments Ditty hits the drama and music throughout the country. I was speaking on the subject the other day to someone connected With the publishing business. My friend said he thought the Entertainments Duty was a perfectly fair tax. I said, "You really; do?" and he said, "Yes." "But," I said, "I should propose to extend it." He asked, "To what?" and I said; "To novels"; and I would ask the Financial Secretary to the Treasury why,
if he is going to tax the theatre which puts on a play adapted from a novel, he is not prepared to tax the novel itself? he is going to tax the unfortunate person who risks his money in putting on a drama adapted from a book that is one of our best sellers, why not tax the best seller itself, instead of merely taxing the person who risks his money in giving the public a good show?
I do not understand why the theatre and music hall have been chosen in this way. Is it not difficult enough to run opera in this country, as many a man has found, without penalising them still further, and driving people out of the educative force of music and good drama into the cheap job that is put forward by any speculator in the business The only business in which prices van he raised is the unworthy business. I would ask, have the Treasury ever considered fully who it is that is paying this duty, and whether they are doing any good with their paltry £2,000,000 or £3,000,000, which I suppose is all that the theatres and music halls contribute to the Exchequer? That is not in any way corn parable with the harm that is being done to this most deserving industry Throughout the War the industry was assured that this tax was merely a. momentary matter for the War period The Chancellor of the Exchequer gave a pledge that it should be taken ff after the War. He did not give a pledge that the Corporation Profits Tax should be taken off, but that pledge was given to these people, who used their buildings throughout the War, and do now, with the greatest possible generosity in support of practically every deserving object When a whole lot of people connected with the industry come before the Chancellor of the Exchequer and put their case, he is quite unable to dispose 'if their case, but, when he comes before the House of Commons, a Budget is introduced in which something is taken off beer, something is taken off the Corporation Profits Tax, something is taken off here as a sop to wealth, and something is taken off there as a sop to something else, but he cannot find time even to mention these people, who had received pledge from the Chancellor of the Exchequer, when the tax was introduced, that it should be put right as soon as possible Nothing has been done, and, so far as I
can see, nothing is intended to be done, but I would ask business men in the House of Commons to consider why this trade should be taxed in this exceptional way. Is there any other trade that has to face a tax on turnover?

Mr. A. HOPKINSON: Beer.

Mr. HEMMERDE: I am very glad that that has been mentioned. Does anyone imagine for a. moment that there is any connection between the two? When a tax is put on beer, it can be shifted on to the consumer, but how, in the case of the theatre, is it to be shifted on to the consumer?

Mr. HOPKINSON: In the case of beer it is a tax on turnover.

Mr. HEMMERDE: At any rate, it is a tax on turnover that can very well be shifted.

Colonel WEDGWOOD: Look at the brewers' profits!

Mr. HEMMERDE: That bears out what I was saying; it can perfectly well be shifted. When a trader has accumulated stocks, he, at any rate, can get rid of them. [HON. MEMBERS: "At a price!"] Yes, at a price, but a theatre is not in that position at all. Not only is it practically the only industry in this country that is really taxed on turnover, but it is in a position that makes it perfectly impossible for it to get back any tax that is put upon it in this way. Again, so far as the theatre is concerned, hon. Members will recollect that during the War the Government made it impossible for new theatres to be built, but, at the same time, they permitted the theatres that did exist to put up their rentals to fabulous sums. If the building of theatres is limited, the rents charged for those that remain ought to be limited. That was not done, and the result is, that this industry, more than any other, is the victim of a corner in rents; and yet the people who are suffering under this rotten system of land tenure almost more than any other industry in the country, are to be the special people who are to suffer from this particular tax. Unfortunately, it is a trade, if it may be called a trade, or an art, or whatever it may be, that finds it very difficult to make its voice really heard in the House of
Commons. Even when we have here distinguished members of the profession, such as the hon. Gentleman who has just addressed the Committee for the first time, sometimes they are more interested in other subjects, and it falls to one who is only very indirectly connected with the stage to put before the Committee a very real grievanve that a very deserving body of people feel in this most oppressive tax.
It is merely a matter of about £3,000,000. I doubt whether the Financial Secretary will say that, so far as theatres and opera are concerned, it can possibly be a larger sum. I think he will admit at once that the larger part of the Entertainments Duty must obviously come from games rather than from the theatre and the music halls. Is it too late now to reconsider this very small matter? As I was saying just now, the theatre is very largely enlisted as a generous dispenser of charity, and they feel very strongly on this matter. I can' assure the Financial Secretary, as I have formerly assured the Chancellor of the Exchequer in the old days, that it is a matter upon which very bitter feelings exist. These people feel that they do so much—not only the theatres themselves, but the members of the profession—that they do all they can to organise charity, and that they do what they can for good works in all directions. What do they get for it? In the country, at the present time, the touring theatres are in a lamentable condition. People cannot afford to pay for the higher-priced seats without cutting down the number of times they attend. It is the same with cinemas—not, if I may say so, quite so deserving as the theatres—and with anyone who runs opera in this country. You have, at the present time, a National Opera Company striving against great odds to do good work for music in this country. How do you help them? By putting on this preposterous tax, for which you cannot put forward any real justification, and which is not really worth while. You never had it before the War. Why should you have it now? There were definite pledges given that it should be taken away, and we ask the Financial Secretary to do all he can, even at this late hour, to do justice to this very public-spirited and necessary profession.
From the point of view of education, does the Committee know that, when I put
forward a plea for the stage and the opera, it is a plea for what is a great educative force? There is no doubt at all at the present time that the plays which find it most difficult to survive are the good plays. It always was so, and the more you raise the expenses and stop people going to the theatre by these heavy prices, the more you are going to hurt the good play that always struggles against adversity to get to a more or less limited public. It is the good things that suffer the first, and for that reason I ask the Chancellor of the Exchequer, even from the point of view of education, to consider most seriously whether he cannot help in this matter. I do not think it is a matter where a little here and a little there would do. I know that sometimes demands have been made that the Treasury should alter the basis, because at the present time there is a higher percentage of tax on the cheap seats than on the more expensive seats. My hon. Friends on these benches think very strongly on that question, but it is not enough when you are dealing with a matter running into such a small sum of money; it is a matter of getting rid of the thing altogether. It is not a question here that you have to find new sources of revenue. After all, if it were a case of new sources of revenue, you could get them where, at any rate, they would not be obviously unjust like this one, and you would have some other defence than the statement, "We must get the money somehow."
In this particular matter, you leave theatres with this preposterous burden upon them, and you do not make any effort to get back one penny of the enhanced rental that the profiteer makes by letting the theatre to the really enterprising man who is running it. During the War, one man, to my knowledge, so cornered the theatres of London that he was making profit rentals of£1,250 a week. [HON. MEMBERS: "Was he paying Income Tax?"] He was paying Income Tax upon that, but it does not seem to me that to pay Income Tax upon a monopoly and corner value is the same thing as paying Income Tax on what you fairly earn. I do not look upon an unfair profit like that, obtained by cornering theatres, or land, or anything else, as a profit that can be compared with the profit of the professional or the business man who, in his business, makes a profit. I shall have many opportunities
of discussing other aspects of the Budget, and I am not going into that to-day, but it would be idle to tell the Committee now that this wretched little tax, that causes so much hardship on a most deserving branch of the people of our country, is kept on because we cannot do without it. Of course, we can do without it. We ought to do without it. When we are making demands on the men and women of this profession, again and again, to help in every charitable cause, we might, at any rate, be charitable enough to examine this question, not from the point of view of carelessness or prejudice, but from that of honest economics, and see if we cannot do something to clear this disreputable little tax out of our economic system.

Mr. DENNIS HERBERT: The Chancellor of the Exchequer's Budget this year has led to a very interesting discussion upon two points which, I think, are well-worthy of discussion. First of all, there has been discussion upon the question of reduction of debt or reduction of taxation; and, secondly, there has been the question as between direct and indirect taxation. I do not propose to follow the discussion which has taken place on the first of those questions, as to the comparative merits of the reduction of taxation or of debt. Broadly speaking, everyone agree that both those courses must be followed at the present time, and that it is only a question of just where you draw the line between the one and the other. On the whole, the Debate has shown that the Chancellor of the Exchequer has not gone very far wrong in either direction. The question I want, if I may, specially to bring back again to the attention of the Committee is that of direct and indirect taxation. It seems to me that there has been a vast lack of understanding as to what is the effect of the reduction of direct taxation. Perhaps it is not altogether surprising that there should be a misunderstanding on that point, particularly on the benches opposite, when one comes to consider the somewhat remarkable speech made yesterday by the Leader of the Opposition. The hon. Member for Aberavon (Mr. Ramsay MacDonald), speaking of the reduction in Income Tax, and dealing with the argument that a reduction in Income Tax was good for trade, seemed to, hold the remarkable view that the only way in
which such a reduction was a stimulus to trade was that the amount not paid in income Tax was said to be available for investment. He, I think, showed—if I may say so—even for him, the lack of experience, perhaps, of practical business matters which results from a mere theoretical investigation into this subject. He was peculiarly unfortunate in two particular passages of his speech. In one, he said that
limited liability companies are influenced by income Tax payments in a very minor degree."—[OFFICIAL REPORT, 16th April, 1923; col. 1750, Vol. 162.]
I do not think there was a single hon. Member in this Committee, actively connected with limited liability companies, who was not inclined to laugh at that statement. A little later on, we find that the hon. Gentleman ventures to refer to a particular company, the Vickers Maxim Company. Of course, that is the company known as Vickers, Limited. He suggests that when they put in tenders for some large piece of work,
they do not consider at all what the Income Tax is, because it has nothing to do with the matter.
I think no more astonishing statement has ever been made from the hindmost benches of this House.

Mr. LANSBURY: From your own back benches.

Mr. HERBERT: Astonishing as are the remarks that have been made from this side of the House, especially when some of our hon. Friends, now sitting opposite, were on this side, I do not think there has been anything more astonishing said than that..Let us go a little further, and see what is the hon. Gentleman's knowledge of the facts with regard to the Vickers Company, because he, goes on to speak of the
psychological effect of paying 12 per cent. when the Income Tax is 5s. in the £…"—[OFFICIAL REPORT, 10th April. 1923; col.,1751, Vol. 162.]
Vickers, Limited, was a most unfortunate company for the hon. Gentleman to have chosen. In the first place, one-half the capital of that company is what may be described roughly as prior charge capital, borrowed money, bearing a fixed rate of interest. The other half, the ordinary capital, issued at a premium, and standing in the days before the War
at something between 30s. and 40s. per £1 share, was paying, before the War, what was by no means an excessive rate of interest on capital which is engaged in industry, with all the risks of ordinary capital in industry. They were paying then, immediately before the War, 10 per cent. on those shares. What has been the result in modern times of this company of which he speaks as paying 12 per cent. and caring not a rap what the Income Tax may be? For the year 1920 that company did not make a profit but made a loss. Since then, with the revival of trade, they were able last year to pay five per cent. on those shares, which cost most of the shareholders nearly double their nominal value and are therefore certainly not paying interest of more than about three per cent. at the-outside.

Mr. NICHOL: What was the company repaid from the Treasury as repayment of Excess Profits Duty?

Mr. HERBERT: What the company has got back from the Treasury as return of Excess Profits Duty does not affect my argument but I take it the hon. Member means to suggest that they got back large sums from the Treasury. Is that so?

Mr. NICHOL: We want to know.

Mr. HERBERT: I cannot say what they got back. I have no doubt they got something back, and what would they have been able to pay if they had not got it back when, in spite of getting it back, they were only able to pay a miserable 5 per cent.? But I do not want to be drawn off the main point of my argument by following too far the hon. Member's references to particular trading companies. I want to point out that hon. Members in all parts of the Committee do not seem to realise sufficiently the way in which the poorest classes of the country are likely to be assisted at present, more than at other times, by a reduction in those taxes which particularly hamper industry. I wonder if the hon. Member knows the large number of big businesses, giving employment to an enormous number of hands which are keeping going with the greatest possible difficulty. Many of them are working at no profit at all hut some at a loss. They are keeping going to some extent for the, benefit of these who get a living out of the wages they pay, and, to some
extent in the hope that with improved trade they will make a profit in future years and preserve their good will in the meanwhile. Those companies which are just managing to carry on at present will not increase their trade, they will not increase the numbers they employ, they will rather be inclined to go out of trade and discharge their employés and shut down altogether, unless trade and industry improve. Therefore, when you have a state of affairs, which you have at present, of comparative general poverty in the country and a large amount of unemployment, what is wanted in the interest of the poorest classes, more than any others, is to get trade going again so that you may get more employment and bigger profits made, which you can tax, and then when the time comes that you get trade going again on a normal basis, and not hampered by the present conditions, then is the time when you can deal with indirect taxation. But, meantime, by reducing direct taxation you are tending all the time, not only to increase employment, but to lower prices at the, same time.
That argument, I admit, would not have the same force if they were in a flourishing condition, but it is when so many of our businesses are on the verge of having to shut down that the need comes for helping them and for keeping employment going. There is another thing which does not seem to be recognised with regard to this question of indirect taxation. Every hanker will tell you that as things are at present a very large amount of direct taxation, that is to say, Income Tax, Supertax and Corporation Profits Duty, is being paid out of capital. A capital levy has its adherents. If those who are at present in favour of it will study rather carefully the very temperate articles written by Mr. Paine in the "Times," and—I am saying this with the greatest respect and meaning it—with the intelligence hon. Members of the Labour Party have in these subjects when they once devote their attention to them, I feel sure the result of those articles will be very good. Whatever may be the advantage or the disadvantages of a capital levy directly made as such, when you get direct taxation which is intended to be a tax upon income and upon profits, and you will find the effect of it is that profits will not bear it, and that it has
to be paid out of capital, then you undoubtedly have a state of affairs which is very serious and very dangerous indeed to trade and industry.
The hon. Member for Keighley (Mr. Lees-Smith) referred to the Waterloo debt and the fact that so much of it remained till just before the War. That leads me to another illustration of the.present position with regard to direct taxation and the ratio which the reduction of direct taxation should bear to repayment of debt. It is all very welt to say that our National Debt just before the War was just the same as the great debt of those times which was incurred as a result of the Napoleonic wars, but if the hon. Member proposes seriously to use that as an argument, must he not also remember the great changes which have taken place otherwise in the course of 100 years? Does he not know that the income and the profits assessable to taxation in the year 1913 were very much larger than those which were assessable to taxation in 1815? Therefore you cannot Compare the National Debt with that of 100 years after on the same basis by any manner of means. What you want to do at present is, by reducing direct taxation, so to encourage trade that you get larger profits made and larger areas over which your tax is imposed and thus get, by a smaller rate of taxation, a comparatively larger total of tax in the end. I urge hon. Members to consider very carefully indeed whether, in the interest of those who are worst off at present, and most of all in the interest of the unemployed, what is not wanted is to reduce as far as possible those taxes which are particularly a hindrance to trade.
May I say one word to the Chancellor of the Exchequer on the question of the Corporation Profits Tax? I am not going to labour the badness of that tax, because the right hon. Gentleman knows it perfectly well. He has had all the arguments put before him by experts who are much better able to put them than I am, but, grateful as i am for the reduction of that tax, I am disappointed that he has not seen fit to get rid of it altogether. I realise that the tax having been put on in June instead of at the end of the financial year, and the country having already more or less got some way into the new financial year, we should not get the full advantage that might be expected in gets
ting rid of the Corporation Profits Tax immediately this year, but I do ask the Chancellor of the Exchequer to consider whether he cannot later in this Debate give us, as far as he is able to do so, a definite undertaking that, if he is able to the it, he will get rid of this tax entirely at the end of this year. I make that appeal to him especially for the reason that one of the ways in which this tax is most, burdensome upon those industries which have to pay it, is the great expense and trouble which they are put to in connection with arriving at the amount which they have to pay. If these companies were told that this was the last year in which they would have to make these returns, it would save them a very considerable amount of expense and a very considerable amount of trouble during the next 12 months.
Much has been said in comparison of the reduction of the duty on beer, and reduction of the duty on sugar. I was satisfied before the Chancellor of the Exchequer made his speech yesterday that any reduction practicable in the duty on sugar at the present time would be absolutely useless in the end to the consumer. Therefore anxious as I am that sugar should be one of the first things in respect of which the duty should be reduced, I cannot do otherwise than think that the Chancellor of the Exchequer has been perfectly right in not reducing the duty at the present time. I have always been in favour of the reduction of the sugar duty, not merely because it is one that hits every person in this country, but because sugar is a very important raw material, and if we cut clown the price of sugar in any way it will help industry. I am, however, persuaded that any practical reduction in the duty on sugar at the present time would not materially reduce the price of sugar in this country, and I cannot do otherwise than congratulate the Chancellor of the Exchequer on having the courage of his opinion and refusing, in spite of the unpopularity which might result, to reduce the duty, which would in the end benefit the people of this country little if any at all.
Let me compare the question of the reduction of the Sugar Duty with the reduction of the Beer Duty. The reduction in the Beer Duty will give real and
genuine relief. [Laughter.] Hon. Members laugh, but if they will follow my argument I think they will agree with me. This reduction in the beer duty will give relief in a great many poor homes. [An HON. MEMBER: "Inebriates homes!"] Rightly or wrongly, although we have nothing to do with that for the purpose of this argument, a very large number of the hardest workers amongst the poorest classes of this country look upon a glass or two of beer a day as being as much a necessity for them as tea is for some other members of their family, and just as much a necessity as a drink as bread is as a food. When that is the case, a man who is earning a low rate of wage in this country finds it very hard to put down his ordinary allowance of beer, if he is a moderate drinker, by half: but even when he has cut it, down by half that item of weekly expenditure is above the proportionate cost of anything else in the weekly bill of that household. To say that reduction of the price of beer is not helping the rest of the family is a gross libel upon the poor working classes of this country. If the type of man I am speaking of saves 6d. a week on his beer there will be 6d. a week more for the other members of his family. [Interruption.] I am sorry that I cannot deal with the interruption, because it was made by three or four hon. Members at once, and I cannot hear more than one voice, at a time. The great advantage of the reduction of the Beer Duty is just on the same lines but in an inverse way as the reduction of the duty on sugar is no advantage. Here is a case where the Government is benefiting those whom the reduction is meant to benefit, partly at the expense of those who are making profit, namely, the brewers, and partly at the expense of the country.
A ward for the brewers. The brewers undoubtedly have been making large profits. if they had not been doing so the Chancellor of the Exchequer would not have been able to make the arrangement that he has, in which the brewers are to bear part of the cost of reduction in the price of beer. If the brewer had taken per pint off the price of beer during the last year, not only would he have reduced his profit but he would have wiped the profit out altogether. [HON. MEMBERS: "No!"] It is an undoubted fact. I have no interest whatever in any brewing concern in this country. The
argument which I have just made is one which ought to be known, The brewer could not have reduced the price of beer to the ordinary consumer without some help from the Government unless he had wiped out his profits altogether. I congratulate the Chancellor of the Exchequer on the courage that he has displayed in refusing to reduce the duty on sugar this year, but I sincerely hope that he may be able to do it another year, and I equally congratulate him on the good bargain that he has made for the ordinary beer drinker by being able to get a concession on the part of the brewers as well as on the part of the Government.
With regard to the question of new forms of taxation, it is almost impossible to suggest an entirely new form. The Chancellor of the Exchequer has been attracted by a suggested tax on betting, which is a very old suggestion. I am going to make a suggestion which I hope will have some attraction for him. I would ask him to consider very carefully whether it is not worth while again setting up a Committee to inquire into the practicability of a tax on advertisements. I know there are certain objections to it, but I believe the amount of profits made out of publicity and advertisement at the present time are so large that a very considerable revenue might he raised by a tax on advertisements without seriously interfering with the benefit which trade gets from advertisements. I would ask the Chancellor of the Exchequer to consider very carefully whether a tax of this kind is not worthy of adoption.

Sir GODFREY COLLINS: The hon. Member, in the concluding part of his speech, advocated a tax on advertisements. If the Chancellor of the Exchequer instituted such a tax, whether it would he retained on the Statute Book many years is well open to question, for of the three new taxes levied during the War and the post-War period, the Excess Profits Duty has been repealed, the Corporation Profits Tax is on the road to permanent repeal, and it may be that pressure from this House will force the Chancellor of the Exchequer to repeal the Entertainments Duty. So that if the hon. Member be able to urge the Chancellor of the Exchequer to adopt his view, I am afraid it would only be for a very short time. Earlier in the evening, the
right hon. Gentleman the Member for the Hillhead Division of Glasgow (Sir R. Horne) took exception to my criticisms levied last year about his Budget. I admit quite frankly that my forecasts were inaccurate. I will not seek to justify my statement on that occasion, but, during the course of those Debates, I made one further forecast about the Chancellor of the Exchequer. It will be within the recollection of hon. Members who were here a year ago that the Chancellor of the Exchequer made great play with the amount of the National Debt which had been reduced during the last two or three years. He omitted to tell the House of Commons at the same time of the very large sums which the Exchequer had received from the sale of War stock, and during the course of that Debate I pictured the chairman of a company telling his shareholders at his annual meeting that during the past 12 months he had discharged and reduced his liabilities, but had omitted to tell the shareholders that he had done so by selling his capital assets. I wonder whether the chairman of a public company who did that would continue in his office 12 months hence, and, as I heard the right hon. Gentleman speaking from the back benches this evening, although I frankly admit my forecast about his revenue and expenditure was inaccurate, the other forecast, I am afraid, proved to entirely accurate.
10.0 P.M.
Passing from that subject, I am glad to think that, during the past 12 months. the Departments have curtailed their expenditure. Many hon. Members, when we debate these, subjects, agree that the level of taxation is determined by the rate of expenditure. That, no doubt, is true, but let me put this point to the Committee. During the War the inhabitants of Great Britain accepted higher level of taxation than any country in the world. The citizens of France would not permit their Government to levy any income tax at all. The people of America would not allow their Government to raise taxes to any extent. But the people of Great Britain faced heavier financial sacrifices than any country at any period. The point I put to members of the Committee is this. If that spirit of self-sacrifice had not run through the minds and hearts of the people of Great Britain during the War, would the present level of taxes be as
high to-day? Would not the large statistics in each year since the Armistice have forced the Government of the day to reduce largely their expenditure? I believe that the large sums received in Revenue through the self-sacrificing spirit of the nation has enabled the Government during the last four years to spend money in a lavish direction. I rejoice, however, that the expenditure during the last 12 months has been reduced. I see the Chancellor of the Exchequer in his place, and I hope that I may put one or two questions to him on that particular point. The actual expenditure on the Army, Navy, and Air Force last year is less than the estimated expenditure for the coming year. Can the Chancellor of the Exchequer explain why the Army only required £45,000,000 last year, and a much larger sum is required for the present year? The surplus of £101,000,000 has been secured through the reduction of expenditure during last year, and I hope that the Chancellor of the Exchequer may give us the information how it is that the fighting forces of the Crown, according to this financial statement, actually cost less last year than the Estimates of the present year.
I turn to the Chancellor of the Exchequer's proposals, and I am indeed glad to congratulate the right hon. Gentleman on his courage in finding a sum of £40,000,000 towards the reduction of Debt. Many hon. Members are pressing him to spend that surplus in other directions. I hope he will maintain his position. It may be that some hon. Members think that that figure, which amounts to a ninepenny Income Tax, is too much. Whenever an individual is paying his Income Tax this year, he may realise that ninepence in the pound goes towards the reduction of Debt. I will not point out the great and definite advantages which the reduction of Debt brings to this country, but it will be within the recollection of hon. Members that during the last four years the total surplus applied to the reduction of Debt has been only £147,000,000. For the three financial years ending 31st March, 1922, the total surplus was £21,000,000. Last year, according to the financial statement, the Chancellor of the Exchequer has
secured a surplus of £136,000,000. Therefore, during the last four years, the total surplus for the reduction of Debt has been only £147,000,000. So that I think the Chancellor of the Exchequer is to be congratulated on finding a sum of 240,000,000 in the coming year out of taxation towards the reduction of Debt.
Our efforts in this direction do not corn-pare favourably with America. The Chancellor of the Exchequer during his recent visit, no doubt, received information from the American Treasury as to their repayment of debt. Five per cent. of our Revenue is being set aside for the repayment of debt, whereas 10 per cent. of the total revenue of America is being set aside for the repayment of debt. For every £100 Great Britain is finding in interest on National Debt, we are finding £15 to repay debt; while, on the other hand, America, for every £100 she is finding to pay interest on her Debt, is finding as much as £40 to repay debt. When our manufacturers are competing against American manufacturers they are handicaped severely by the present high level of taxation. I know it is said by some hon. Members that a high Income Tax does not hurt trade, but every manufacturer when he is sitting down to fix the price of his article, knowing that he has to pay 4s. in the £ Income Tax, has a very cogent factor in his mind to maintain prices. But whether that be so or not, the manufacturer to-day, competing with the French industrialist or the American manufacturer, has a very much smaller sum to set aside for improvements. I hope therefore the Chancellor will bend his whole effort to curtailing our large expenditure so as to be able to reduce taxation during the coming year. An analysis of our total expenditure shows that some £50,000,000 to £70,000,000 could be cut off in the coming year. If that could be achieved or even half achieved, large reductions of taxation could take place.
I come for one moment to the Chancellor's proposal regarding reduced taxation. He informed the Committee that his concession in regard to Beer Duty would cost the Exchequer some £13,000,000. If I understood him correctly, the price of the bulk barrel is to be reduced by 24s., of which the Exchequer is to lose 20s. Is the 4s. which the brewer is to lose sufficient? It is quite
evident that with the reduced price at which the brewer is enabled to-night to sell his beverage, he is to get an increased turnover during the year. The taxpayers of this country are going to enable the brewers to increase their turnover during the coming year. It. is very difficult for one who is not conversant with these things to know exactly what percentage of price the brewer is to forego. If my information is at all accurate, the brewer is to reduce his price by some 4 per cent. While, on the one hand, he is reducing his price by 4 per cent., he is being enabled through the taxpayers money to maintain his profits, which are admittedly vast to-day. In reply to a. question, I think by the hon. Member for Colne Valley (Mr. Snowden), it was stated that the profits in the brewing industry in 1921–22, in comparison with the year before the War, had increased by £7,500,000. Is this the time, when every direct and indirect taxpayer is being severely hit by high taxation, that the brewing industry should be singled out for such exceptional and generous treatment that their business is going to be largely increased during the coming year. I hope we will take an opportunity at a later stage of the Bill to press the Chancellor of the Exchequer on this point. I hope by question and answer we may receive from the Chancellor of the Exchequer some exact information so that the Committee may know the exact percentage of profit the brewer being asked to forego while he is getting this very generous treatment from the Treasury.
I agree with the right hon. Member for Paisley (Mr. Asquith) that the indirect taxpayer, who should be singled out for such preferential treatment, should have been the indirect taxpayer who consumes sugar. The Chancellor of the Exchequer seems to suggest that even if the duty on sugar was lowered from 2¾d., the present rate, to 1¼d., which would still be five times a larger sum of duty than was levied before the War, that that decrease in duty would not be passed on to the consumer. I think a large cut in the taxation levied on sugar would find its way into the pockets of the indirect taxpayer. I am glad to congratulate the Chancellor of the Exchequer on his Budget, except where it deals with the Beer Duty. I believe the time is ripe for a big forward movement in this
country. The markets abroad are waiting. Our industrial classes have willingly accepted a reduced level of wages during the last 12 months. The costs of production have been reduced, the level of taxation has been lowered. [HON. MEMBERS: "Monopolies are still strong!"] It is said that monopolies are still strong, but my knowledge of manufacturers makes me think that every manufacturer competing for orders, not only against a brother manufacturer in this country but competing for orders in the neutral markets of the world against America and other countries, is endeavouring to secure as much business as he can at the very lowest prices. I believe if the Chancellor of the Exchequer during the current year will direct his attention once again to a further cut in the unproductive expenditure of the State, he will be enabled 12 months hence to come to this House and point out that, although his estimated surplus this evening is only £1,175,000, he will realise a larger sum, and be able in the coming year to lower taxation to a much lower level.

Major WHELER: I wish to refer to two remarks which were made early in the Debate by the hon. Member for Shettleston (Mr. Wheatley). The hon. Member said that the amount for the Ministry of Labour, £16,000,000, was being found by a reduction of £16,000,000 in the amount for the Ministry of Pensions, and that that was robbing the pensioners. I would ask hon. Members opposite to remember that only last October pensions were stabilised for three years, and that being so it is incorrect for any hon. Member to say that £16,000,000 is being obtained by robbing pensions, and that statement ought to be withdrawn. A reduction in pensions comes automatically, owing to the number of people who come out of pension for one reason or another, so that in the course of time the serious burden of war pensions is wiped out altogether. The statement to which I have referred was so serious that it was essential that it should be taken up at once.
Another extraordinary statement was that £300,000,000 was being collected in Income Tax, and that a similar amount was being paid out in interest, and that therefore the Income Tax payers did not suffer through Income Tax because they
got back everything that they paid. If that argument were carried further it might as well be said, "Why not have an Income Tax of 20s. in the £? You would not have any Income Tax to pay, because you would get back everything you paid." The argument is so absurd that I need not comment on it, except. to say that such remarks show an extra ordinary want of comprehension of the question of finance on the part of hon. Members opposite, and the fundamental difference which exists between us and them.
I would like also to reinforce an appeal made on a small but very important matter with reference to the money which is to be allocated to the relief of rating. No mention was made of it in the very important Budget statement. The agricultural community, as a whole, are anxiously awaiting a statement on this point. An answer was given to an hon. Member opposite with reference to the amount only yesterday, and it was said that the amount would be about £3,700,000, and one would rather expect to hear in the Budget statement of the Chancellor that some provision would be made for that money. My right hon. Friend the Member for Chelmsford (Mr. Pretyman) raised the question yesterday, and I raise it again to-night, because it is a matter of great urgency to the agricultural community, who want some statement on the matter.
I congratulate the Chancellor, at any rate, on taking something off the beer. The county which I partly represent is deeply interested in this question, because we grow hops, and though everybody knows to-day that there is not the amount of British hops in beer which we should like to see, yet, at the same time, with increased consumption of beer there must be some increased consumption of hops, and because the cultivation of hops does give a great amount of employment, I am glad to hear that something is being done to encourage the fair and honest drinking of a legitimate amount of beer by making the price cheaper. I only wish that the price could be reduced by 2d., because even at 6d. the pint it is a very heavy burden on the type of man who is very hard pushed by the reduction of wages, and the actual Id. does not make so much difference. In "reference to the
suggestion for a reduction of the tax on sugar, though I do not minimise the importance of a reduction in the price of sugar, yet I think that the reduction in the price of beer is more needed, and that therefore it was better first to give relief in this direction. I shall be interested to see, after having heard hon. Members opposite cheering a reduction of the tax on sugar as against the reduction of the tax on beer, whether they will have the courage to vote against a reduction of the tax on beer.

Colonel WEDGWOOD: When listening to a Debate on the Budget, I always feel that it is regrettable that the working man does not appreciate that the richer the rich are the better off he will be. It is really pathetic. We get speech after speech from the other side, whatever Government is in power, showing how the man who is going to get more money out of the Budget than he got before will employ more British labour, thereby benefiting the human race. It was the hon. and learned Member for Watford (Mr. D. Herbert) who asked the Labour party, really with a view of instructing them, whether they had read the bankers articles in "The Times." I did. Most of us read those articles, and they were admirable stuff. There was an article pointing out quite conclusively that if the rich people are taxed, they will have to scrap some of their chauffeurs and butlers, with the result that more people will be out of work. That argument is still considered to be good enough for the British working man. But I think that hon. Members who use it misjudge the British working man. The British working man has got beyond that. He realises that he would rather have more money to spend, and thereby more opportunity of employing other people in making the things which he wants, than that others should have the money for employing someone in making the things they want.
This Budget Debate has been interesting. The Chancellor of the Exchequer has, of course, reversed completely the policy of his predecessor. We. have had the apologia pro vita sua from the Chancellor. What amazed me was that the late Chancellor of the Exchequer took the greatest possible credit for the Budget of this year. That struck me as amusing, because the surplus this year has been created, not by the foresight of the late
Chancellor of the Exchequer, but owing to the rigid cutting down of expenditure last year, which might have taken place two years before if only the Chancellor had known his business. At last the Chancellor's hands were forced; the Geddes Committee was appointed and the expenditure was cut down. But to regard that as a feather in his cap, when he might perfectly well have done exactly the same thing, and ought to have done it two years before, seems to me to be asking rather much of the House and the country. The present Chancellor of the Exchequer has reversed the policy of his predecessor, and the Committee is considering now the very interesting problem whether it is best in the interests of trade to pay off debt or to reduce the Income Tax. That is the problem which the present Chancellor of the Exchequer and the past Chancellor of the Exchequer have studied, and they have come to diametrically opposite conclusions on the question.
We have to be thankful for small mercies when we have a Tory Government in power. At any rate, I think we may be grateful that we have the present Chancellor of the Exchequer rather than any of the four right hon. ex-Ministers who have been lecturing the Committee on what they ought to have done with the finances of the country. Last night we had the right hon. Baronet the Member for West Swansea (Sir A. Mond) who advocated borrowing money with which to pay pensions, and thereby reducing taxation. There are a number of people who agree with that view, but thank goodness they are not in the Government. Then we had to-day the ex-Chancellor of the Exchequer saying it was lamentable that we were paying so much off the debt, when it would have been so much better to have taken a shilling instead of sixpence off the Income Tax. Had we done so, according to the right hon. Gentleman, all would have been well. Then we have the ex-Financial Secretary to the Treasury—a Liberal—advocating what would have turned Gladstone's hair grey, that the best way of reconstructing society, of solving the unemployment problem and of doing everything in fact, was for the State to spend money in the general lowering of costs and to do as the Pharaohs used to do when they employed people to build pyramids in times Of unemployment. To finish up with, we
had the ex-Secretary of State for War who, of course, has been accustomed to spending Government money. He invented a brand new method of spending money which they had not got. I ask the Committee to observe the wonderful unanimity between the ex-Coalitionists, between the Conservative Coalitionists headed by the ex-Chancellor of the Exchequer and the ex-War Minister and the Liberal side of the Coalition headed by the ex-Minister of Health and the ex-Financial Secretary. "Financial Secretary," observe, and he advocated the most unsound finance that has ever been put before the House of Commons without the slightest reproof from any of their leaders. [An HON. MEMBER: "Which leader"?] I agree there are too many leaders. I turn to the Ministry of Under-Secretaries with relief. The problem is this. Shall we best improve trade by paying off debt or by reducing taxation? We on these benches agree with the Chancellor of the Exchequer that the best way to improve trade is to pay off debt. Of course, I know we are denounced for it. It is regarded as almost approaching Bolshevism, but we congratulate the Chancellor of the Exchequer upon his £40,000,000 for debt reduction. We think paying off debt is essential to the recovery of trade, and we believe as we pay off debt every penny piece paid off goes back into trade, facilitates industry and development and cheapens capital. We hope to have a general capital levy in order to hasten the facilitating process, and we are glad as prospective colleagues of a Chancellor of the Exchequer. I am so sorry we are not going to have the ex-Financial Secretary to the Treasury. I observe that, writing in the "Daily News." a most sound organ, he says:
 Would not capital then, for its preservation, seek by all means to reduce prices, and if the best way to reduce prices is for capital to sacrifice part of itself in a capital levy, would not it, for its own sake, be prepared to do so? 
Yet the Financial Secretary to the late Treasury, getting up to-day, forgetting his keen, bright past, ventures to denounce the hon. Member for Keighley (Mr. Lees Smith) for following in his footsteps and advocating those sound views that he once advocated. But it is not the late Financial Secretary's views en the Capital Levy to which I want to
call attention. People may change their views. [HON. MEMBERS "Hear, hear!"] We all have. Bright, new ideas come along, and we realise that we did not see so clearly as we do now, but we have never yet begun to realise that the mathematical problem that two and two make four was wrong instead of right. The arguments put forward by the Financial Secretary of the late Treasury still stand good. I will read now from a speech delivered by him in this House, putting the arguments down seriatim in favour of this effort at repayment of debt which is being adopted by the Chancellor. He said:
 On the whole, I welcome the abandonment of the war levy, because I believe it opens the way to what is an essential matter……the more inclusive scheme of a general levy on capital.
What a tragedy it is that these great and brilliant thoughts, held before you go into the Coalition Government, are so crushed out in the deadening atmosphere of Coalition. It is not necessary, I think, to advocate at length the Capital Levy in this House. Before long, we shall have the Conservative Government bringing forward exactly the same thing, under a different name. They will steal our thunder, just as their predecessors used to steal the Whigs' clothes while they were bathing, and then they will take credit afterwards for having at length seen the light. But paying off the Debt is, in our opinion, an infinitely better way of starting the wheels of trade going than by devoting the same amount of money to the reduction of Income Tax. If you reduce Income Tax, a certain amount of the money saved by the capitalists may go back into business. Personally, I think the amount I am going to pocket is going elsewhere, and so say all of you. But every penny that is knocked off the National Debt goes back into business; every penny there tends to make capital cheaper, so that capital can be supplied on easier terms than at the present time to any industry that wants it.
It is said there is plenty of capital available to-day. There is, at a price, but if you want to raise money to pay off some of your debentures at 5 per cent. by getting debentures down to 4 per cent., you will find it very difficult to get the capital for it. Therefore, I am a strong advocate of reducing the Debt if you
want to benefit trade, but I do not think any of us on these benches expect to get very much improvement of trade through reducing the price of money, making capital plentiful and thereby cheap. It seems obvious that if you want to increase trade you must give opportunities for increased production. You are doing nothing in this Budget to help increase production. I am grateful for one small mercy. You are not giving£3,000,000 from our pockets to the farmers and the landlords, as was suggested by the hon. and gallant Member for Faversham (Major Wheler). There is nothing in this Budget, no sops, for the landed interests. Of course, the screw may be put on, but, as the Chancellor of the Exchequer knows very well, money found to assist the rates of the farmers simply adds to the land values of the landlords and goes into the landlords' pockets.
I suggest that it is possible to give increased possibilities for production and for trade and to get the goods you want if you make it a little easier for the people who want to make the goods to get access to the raw material from which the goods must come. There has been a coal-mine closed clown in my constituency, and directly they close it down the assessment to the rates is reduced in consequence. Because they were good enough to close the mine therefore the payment they had to make to the local authorities was reduced in consequence. We think it would be very desirable to keep that pit open, just as we think it would be desirable to put rates upon empty houses so that those empty houses might get filled as soon as possible. In exactly the same way we think that rates should be imposed upon empty factories and empty pits if they are empty because they are empty, so that they may he used to better advantage. We would levy all local taxation not upon houses or factories or upon human labour applied to the land and not upon improvements: but the land and the mineral value whether it was being used or not: that would stimulate production by making it very uncomfortable for the people who hold the raw materials in their hands and prevent people from getting work.
It is complained over and over again that working men do not produce more. Give them a chance to produce more. At the present time you are closing down
allotments all over the country because those allotments belong to people who may at some future period want to build upon them. In that way you are increasing unemployment. In the same way as you are closing down mines because if they are open they have to pay rates upon them. We suggest that in your Budget you should take steps towards putting an end to the present land position by putting a tax upon land values. The Minister of Health is not at the moment here, but he introduced a Housing Bill, and it was suggested at one time that the Housing Bill should contain a Clause relating to empty houses. That Clause was much too revolutionary. [HON. MEMBERS: "It is in the Bill."] Yes, but it is optional and not compulsory I know full well that the local authorities and the building interests will see that what we suggest is not done. Why leave it to the Minister of Health? Why does not the Chancellor in this Budget introduce a good solid 2d. in the £ on land values and use the money for taking the taxes off houses and factories and reducing Schedule A, which falls upon land and buildings together, leaving it as a tax upon land values alone? Anything you can do to remove taxation from improvements and from the result of labour is to the good, and at the same time anything you can do to put a tax upon land and land values is also good, because a tax upon the fruits of labour increases the cost of production and puts it on the articles sold. A tax upon land values cannot fall anywhere except upon the landlord; it makes land cheaper, and thereby more accessible to labour. This Budget does nothing to improve trade except in so far as it proposes the redemption of debt. It reverses the policy of the Chancellor of the Exchequer's predecessor, and that is to the good. Let the right hon. Gentleman carry that work further in the future, and let him see that we have, instead of a duty upon entertainments: and taxes upon sugar and tea, a straight tax on land values, which would do more for the prosperity of the country and the production of wealth than anything else contained in this Budget.

Lieut.-Colonel NALL: The speech of the hon. and gallant Gentleman who has just sat down, and other speeches which have been made by hon. Members
opposite, show that the critics of my right hon. Friend's Budget are in dire straits to find some legitimate argument to advance in opposition to the Budget proposals. I was surprised to hear the hon. and gallant Gentleman (Colonel Wedgwood) suggesting from the Labour Benches that taxation should be imposed upon empty pockets, for he suggested that we should tax empty coal pits, empty houses, and empty factories. I rose to ask the Chancellor of the Exchequer one or two comparatively small questions which emerge from this Debate, and which I hope the right hon. Gentleman will give us some information upon when he replies. Little mention has been made of the Entertainments Duty. I am not one of those who ask for the abolition of that imposition, but I do ask the Treasury to consider whether it is quite fair that the present incidence of that duty should be continued. I want to know whether it is possible to consider a more even distribution of the percentage basis in regard to what is at present a very unfair and inequitable duty. I am not pleading for cinematograph companies, because it seems to me that the position is more unfair in the case of the smaller provincial theatres, many of which are threatened with closing down, thus throwing out of employment the people engaged in them. It seems to me to be grossly unfair that in the urban districts of the provinces and of London the people who get their amusement in the smaller theatres should pay larger taxes in proportion to the cost of the seats they occupy than is the case in the larger theatres. One other question that I want to ask my right hon. Friend is whether he thinks, on reflection, that it is really quite fair to abolish the tax on cider produced in the West of England, while other kinds of more or less harmless mineral waters and temperance drinks of sorts should continue to pay tax in other parts of the country. Having regard to the small amount that is involved, I do ask my right hon. Friend to consider whether he could not at this time also abolish the tax on mineral waters altogether.
I am glad to notice that such opposition as appears to be arising on the Budget is concentrating, on the other side of the Committee, on the question of the Sugar Duty. I am one of those who very cordially support what the Chancellor of
the Exchequer has said on this matter, because it would be utterly ridiculous, and, indeed, nothing could be more contrary to the general welfare of the people, than that at this time a reduction should be made in the duty on a commodity with the inevitable result of increasing the price to even more than it is at present. Therefore, it is only in accord with the sort of policy that one expects to see on the other side that that duty should form the rallying ground for all the medley of oppositions with which the Government,s faced. It is, perhaps, singularly appropriate that the party led by the right hon. Gentleman the Member for Paisley (Mr. Asquith)—under whose leadership the greater part of the present Sugar Duty was imposed—should be making some attack on that imposition.
When, however, one looks at the other aspects of the Budget, I want to join in congratulating the Chancellor of the Exchequer on the steps he has taken to grant many and quite different alleviations in taxation, while restoring our financial system to a sound basis. I am astonished that right hon. Gentlemen who were Members of the late Government should have advanced some of the arguments that they have advanced during these two days. It has become almost a commonplace to say that almost everything which the late Coalition ever did it either repealed or hoped to repeal, and it is only, apparently, in continuation of that policy that we find right hon. Members of the late Government now joining in a chorus of denunciation of that Corporation Profits Tax which that Government imposed against the advice of many Members of the House of Commons. It is good to know, even at this late date, that right hon. Members of the late Government have lived to see the folly of their ways in that respect; but, as one listens to their speeches, I must say that my own feeling is that, much as we view with alarm the results in certain parts of the country of what is known as "Poplar finance," thank goodness we are not likely to be involved in a fog of what I may call "Colchester finance." When right hon. and hon. Gentlemen suggest that such a debt as War Pensions can be funded as a loan, I wonder whether they have investigated what was the result of a similar policy in 1822? I will not trouble the Com-
mittee at this late hour with details of what happened then, except to say this, that pensions—Army pensions, half-pay, and civil pensions—were, at that time, made the subject of an annuity of £2,000,000, which was to be paid, I think, over 45 years, out of the then revenue. Sufficient is it for me to say that that scheme was a hopeless failure as, indeed, such a scheme as is now suggested would inevitably be a failure. We have to realise that the question of pensions is not one that will disappear in two or three years' time. I suppose that some of the pensioners may have the good fortune to draw their pensions for probably another 50 years. A great many of them, at least, will draw them for 20 or 30 years. Therefore, the cost of pensions, while it is, and must be, a declining amount year by year, is nevertheless a charge which this country will have to face for 40 or 50 years to come.
One other point. My right hon. Friend said that he was very glad to consider the possibility of a betting tax as a new means of raising revenue. I hope that the Committee which he proposes to set up will report favourably to enable that revenue to accrue to the Exchequer. I want to suggest one other—I was going to say avenue for exploration, but that is a somewhat fatal phrase—possibility for new taxation. An hon. Member on this side, speaking earlier this evening, referred to the fact that in the steel industry the rates and taxes on certain steel products accounted for over 6s. a ton at the present time.
I want to ask my right hon. Friend to consider whether it is altogether well that in such an industry as the steel industry, and indeed in any other industry, the home producer should bear the very heavy load of local rates and Imperial taxation, and yet be undersold in the home market by imported alien manufactures, which have paid nothing whatever to this fund? I am not seeking to raise any issue of Protection in saying that. I merely put it forward in this way, that I believe it is only common-sense and fairness, and that it would be only maintaining the principle of Free Trade, that the imported manufactured products of alien countries should at least pay to the Imperial Exchequer a contribution equal to that paid by the home manufacturer in rates and taxes.
If my right hon. Friend would explore the possibility of a flat-rate countervailing import duty on imported manufactures—not graduated, nor guided at this stage by any principle of protection, but simply as a matter of common fair ness—to collect towards the Exchequer a contribution that would relieve the home producer, I: believe he would find t means of raising a very considerable revenue and, in turn, of granting considerable relief to the home manufacturer. I am sure the feeling is growing in the country, as, indeed, it is growing in this House, that we cannot.afford to see the great industries of this country undersold by the cheaper production of the Continent. We cannot afford to see our people put out of employment by these unfair means of unfair trade. I only hope, when my right hon. Friend brings in his Budget, 12 months hence, he will be able to say that he can derive something from a Betting Tax which will relieve Income Tax, he will be able to derive something in the form of a general countervailing Import Duty which will relieve the burden of taxation on our home producers, and that he will be able to continue the sound policy of finance which he has outlined in his present Budget; and, in short, that he will be able to justify the step that he has taken.
It seems to me a matter on which hon. Members will sympathise with right- hon. Gentlemen who were Members of the late Government, that they have been denied the pleasure of mishandling in the way they have suggested to-day that balance of £100,000,000. We can imagine how the right hon. Gentlemen.who represent the Hillhead Division (Sir R. Horne) or Colchester (Sir L. Worthington-Evans), or Carnarvon Boroughs (Mr. Lloyd George) must look with dismay on the prospect of that £100,000,000 being used by these wicked people who threw that porridge pot out of the window at the Carlton Club. When that porridge pot was thrown out of the window at the Carlton Club, right hon. Gentlemen who were then Members of the Government hoped that, with a shilling off Income Tax last year and with a surplus this year, they would be able to knock two pence or three pence off beer and goodness knows what off sugar. They would then have gone triumphantly to the country
and said, "Look what a splendid.thing is this Coalition." We can well understand how their mouths must water as they see that balance appropriated, not for electioneering purposes, but for the reduction of debt and the benefit of the State. I am sure the country in general, no less than hon. Members on both sides of the House, will congratulate the Prime Minister and the Chancellor of the Exchequer that the windfall has been so useful that they have been able once more to put our finances on a basis which inure perhaps than any other thing at this time will renew confidence and enable industry to take one more turn for the better.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit. again," put, and agreed to—[Mr. Ammon.]

Committee report. Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.

Orders of the Day — AGRICULTURAL WAGES DISPUTE.

Motion made, and Question proposed, That this House do now adjourn"— [Colonel Leslie Wilson.]

Mr. J. JONES: I should like to raise the question of the agricultural dispute in Norfolk with a view to ascertaining whether the Minister of Agriculture is exercising any influence to bring this unfortunate dispute to a settlement. The House will remember that the building trade dispute has been settled by the intervention of Members of this House, and the men and masters have agreed to certain methods of procedure in the direction of securing a settlement. I should like to ask, therefore, if the Minister of Agriculture has taken any steps to try to bring about a settlement of the agricultural dispute, and, if so, what is the situation now existing?

The MINISTER of AGRICULTURE (Sir Robert Sanders): I had no notice that this matter would be brought forward.

Mr. JONES: I thought I would bring it forward.

Sir R, SANDERS: The last step that the Ministry took was to get two gentlemen to go down, to bring the parties together again, and try to arrive at an agreement. They met again last Thursday, but I regret to say that they did not arrive at an agreement, although the difference between the two parties seems
to be a very small one. That, I am afraid, is all that I can say.

Mr. JONES: Has the right hon. Gentleman taken any further steps since' last Thursday?

Question put, and agreed to.

Adjourned accordingly at Three Minutes after Eleven o' Clock